a

GAO

United States General Accounting Office

Report to the Congressional Committees

November 2001 EUROPEAN 

SECURITY

U.S. and European 

Contributions to 

Foster Stability and 

Security in Europe

GAO-02-174

Why GAO Did This Study

For years, U.S. policymakers

have debated the nature and

extent of the contributions that

the United States and its

European allies make to security

and stability in Europe. During

the Cold War, this debate

centered on whether Europeans

were spending enough on

military forces and capabilities.

Since the breakup of the Soviet

Union, a broader range of

instabilities and threats

characterized by ethnic conflicts

in the Balkanshas emerged,

and the terms of the debate have

shifted to include military and

nonmilitary contributions.

The National Defense

Authorization Act for Fiscal Year

2001 required that GAO report on

U.S. and European military and

nonmilitary contributions to

security and stability in the

European region, particularly in

the Balkans. In addition, GAO

assessed NATO and European

defense initiatives to improve

military capabilities for managing

conflicts in the region.

November 2001

EUROPEAN SECURITY

U.S. and European Contributions to Foster

Stability and Security in Europe

This is a test for developing highlights for a GAO report. The full report, including GAO's objectives, scope, methodology, and analysis, is available

at www.gao.gov/cgi-bin/getrpt?GAO-02-174. For additional information about the report, contact Joseph A. Christoff at (202) 512-8979. To provide

comments on this test highlights, contact Keith Fultz (202) 512-3200 or email HighlightsTest@gao.gov.

Highlights of GAO-02-174, a report to the Senate Committee on Armed Services and House Committee

on Armed Services.

United States General Accounting Office

What GAO Found

In addition to critical military contributions, the United States and

its European allies are using a wide range of other important tools to

foster stability and security in Europe. The United States and its

allies disbursed more than $23 billion and $57 billion, respectively,

from 1990 to 1999, for development and nonproliferation assistance

to the former Warsaw Pact countries and the Balkans. Both the

United States and its allies have played a critical role in

multinational peacekeeping operations in the Balkans. The United

States, for example, provided the greatest share of air combat

capabilities in Bosnia in 1995 and in Kosovo in 1999, while the

Europeans provided between 56 and 70 percent of peacekeeping

troops from 1996 to 2001. In addition, NATO and the European

Union are expanding their memberships to include former Warsaw

Pact countries. The enlargement programs have helped stabilize the

region by promoting democracy, developing free-market economies,

securing borders, and fostering military reform.

To address weaknesses highlighted by the Balkans wars, the

European allies have begun to restructure and modernize their

militaries and to participate in new NATO and European defense

initiatives. As of August 2001, however, defense budget projections

for major European countries remained generally flat, which could

affect funding for these initiatives. Concerns about terrorism after

the attacks of September 11, 2001, may result in increased European

defense spending. In any event, the United States will continue to

play an important military role in Europe at least until the end of the

decade.

Commenting agencies concurred with the contents of the report.

Peacekeeping Troops,

Civilian Police, Monitors

Development

Assistance NATO and

European Union

Expansion

Combat Capabilities Refugee

Support

Nonproliferation

Programs

Tools to foster

European security

G A O

Accountability Integrity Reliability

Highlights
Page i GAO-02-174 European Security

Contents

Letter 1

Executive Summary 3

Purpose 3

Background 4

Results in Brief 5

GAO’s Analysis 7

Concluding Observations 13

Agency Comments 14

Chapter 1

Introduction

16

Objectives, Scope, and Methodology 19

Chapter 2

Post-Cold War 

Environment Drives 

Contributions to 

European Security in 

New Directions

26

Reduced U.S. and European Military Forces Provide Security 

Foundation in Post-Cold War Europe 26

Europeans Lead in Development Assistance to the Newly 

Independent States and Central and Eastern Europe, but the 

United States Spends More on Nonproliferation and 

Threat-Reduction Programs 41

NATO and the EU Adapt Objectives and Policies to a Changing 

Strategic Environment 45

Chapter 3

Complex Balkans 

Security Environment 

Addressed With a 

Range of Military 

Interventions and 

Nonmilitary Assistance

51

Military Interventions Included a Combination of Air Combat and 

Ground Troops That Resulted in Shared Benefits 51

U.S. and European Nonmilitary Intervention Includes Combination 

of Development Assistance and Nonmilitary Personnel 57
Contents

Page ii GAO-02-174 European Security

Chapter 4

European Militaries 

Addressing Shortfalls, 

but Competing Budget 

Priorities Are Slowing 

Implementation

68

Allies Restructure and Modernize Defense Capabilities 69

NATO and EU Initiatives Provide New Frameworks for Improving 

Defense Capabilities 75

European Defense Budgets Limit Short- and Mid-Term European 

Defense Objectives 80

Appendixes

Appendix I: Aircraft and Capabilities Provided by Selected Countries in 

Operation Allied Force 92

Appendix II: Progress of NATO Allies’ Efforts in Moving Toward an 

All-Volunteer Force 93

Appendix III: Key Equipment Programs for France, Germany, Italy, Turkey, 

and the United Kingdom 94

Appendix IV: Comments From the Department of State 95

Appendix V: GAO Contacts and Staff Acknowledgments 96

GAO Contacts 96

Acknowledgments 96

Tables Table 1: Changes in Number of Forces 1990, 1995, and 2000 70

Table 2: Major Multinational Equipment Projects Involving 

European Countries 80

Figures Figure 1: U.S. Troop Strength in European NATO Countries, 

1990-2000 28

Figure 2: Number of U.S. Military Personnel Permanently 

Stationed in Five European Countries, September 30, 

2000 29

Figure 3: European Troop Strength in European NATO Countries, 

1990-2000 31

Figure 4: Defense Spending by the United States and Selected 

European Countries, 1980-2000 32

Figure 5: Defense Spending as a Percentage of GDP for the United 

States and Selected European Countries, 1980-2000 33

Figure 6: Costs to Support U.S. Permanently Stationed Forces in 

Europe, 1990-2000 34
Contents

Page iii GAO-02-174 European Security

Figure 7: Development Assistance Totaling $34.7 Billion Disbursed 

to the Newly Independent States, 1990-1999 42

Figure 8: Development Assistance Totaling $36.4 Billion Disbursed 

to Central and Eastern Europe, 1990-1999 43

Figure 9: Security-Related Accession Criteria for the EU and 

NATO 46

Figure 10: Foreign Direct Investment to Selected Central and 

Eastern European Countries, 1990-1999 50

Figure 11: European Bases Available to Operation Allied Force 53

Figure 12: Troops Supporting Peacekeeping Operations in the 

Balkans, 1992-2000 54

Figure 13: Development Assistance Totaling $15 Billion Disbursed 

to the Balkans, 1993-1999 59

Figure 14: Balkans Refugee Migration to Europe and the United 

States, 1996 63

Figure 15: Donor Contributions of Civilian Police to Bosnia 65

Figure 16: Donor Contributions of Civilian Police to Kosovo 66

Figure 17: Personnel Provided to OSCE and EU Monitoring 

Mission 67

Figure 18: Projected Defense Spending in Selected European 

Countries, 1995-2004 82

Figure 19: Projected Defense Spending as a Percentage of GDP for 

Selected European Countries and the United States, 

1995-2004 83

Figure 20: Factors Driving European Defense Spending 84

Figure 21: Projected Trends in Defense Spending for Germany, Italy, 

the United Kingdom, and the United States, 2000-2004 88
Contents

Page iv GAO-02-174 European Security

Abbreviations

CEE Central and Eastern Europe

CFSP Common Foreign and Security Policy

DCI Defense Capabilities Initiative

DOD Department of Defense

EC European Commission

ESDP European Security and Defense Policy

EU European Union

GDP Gross Domestic Product

NATO North Atlantic Treaty Organization

NIS Newly Independent States

OSCE Organization for Security and Cooperation in Europe

OECD Organization for Economic Cooperation and Development

PfP Partnership for Peace

U.N. United Nations

UNHCR U.N. High Commissioner for Refugees
Page 1 GAO-02-174 European Security

United States General Accounting Office

Washington, D.C. 20548

A

November 28, 2001 Letr

The Honorable Carl Levin

Chairman

The Honorable John Warner

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Bob Stump

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

In response to the mandate contained in the Floyd D. Spence National 

Defense Authorization Act for Fiscal Year 2001, we identified and assessed 

(1) U.S. and European military and nonmilitary contributions to security 

and stability in the European region, (2) U.S. and European military and 

nonmilitary contributions to security and stability in the Balkans, and (3) 

the status of North Atlantic Treaty Organization (NATO) and European 

defense initiatives to improve military capabilities for conflict 

management. A companion GAO report, Military Readiness: Effects of a 

U.S. Military Presence in Europe on Mobility Requirements (GAO-02-99, 

Nov. 28, 2001), addresses the mandate requirement to assess the effect of 

forward-deployed U.S. forces in Europe on mobility requirements in the 

event of a regional conflict in Europe or the Middle East. We briefly 

discuss that issue in this report.

We are sending copies of this report to the Honorable Donald Rumsfeld, the 

Secretary of Defense; the Honorable Colin Powell, the Secretary of State; 

and other interested parties. 
Page 2 GAO-02-174 European Security

If you have questions regarding this report, please contact me at (202) 512-

8979 or at christoffj@gao.gov. GAO contacts and staff acknowledgments 

are listed in appendix V.

Joseph A. Christoff, Director

International Affairs and Trade
Page 3 GAO-02-174 European Security

Executive Summary

Purpose Since the Cold War, U.S. policymakers have debated the nature and extent 

of the contributions of the United States and its European allies to security 

and stability in Europe. During the Cold War, this debate centered on 

whether Europeans were spending enough on military forces and 

capabilities. However, the breakup of the Soviet Union resulted in the 

emergence of a broader set of instabilities and threats, characterized by 

ethnic conflicts in the Balkans. In this environment, new questions have 

arisen about the extent of the military and nonmilitary contributions the 

United States and its European allies are making to security in the 

European region.

In response to the mandate contained in the Floyd D. Spence National 

Defense Authorization Act for Fiscal Year 2001,1

 we identified and assessed 

(1) U.S. and European military and nonmilitary contributions to security 

and stability in the European region, (2) U.S. and European military and 

nonmilitary contributions to security and stability in the Balkans, and (3) 

the status of North Atlantic Treaty Organization (NATO) and European 

defense initiatives to improve military capabilities for conflict 

management. In addition, this report summarizes the results of a 

companion GAO report concerning the effects of forward-deployed U.S. 

forces in Europe on mobility requirements in the event of a regional 

conflict in Europe or the Middle East.2

To meet these objectives, we analyzed a range of documents and 

interviewed numerous military and political officials from five European 

allies and the United States. We define European allies as European NATO3

and European Union countries,4

 and Switzerland. We performed in-depth 

fieldwork in and analysis on four European countries—France, Germany, 

Italy, and the United Kingdom—because these countries collectively 

accounted for more than 70 percent of the total gross domestic product and

1

Public Law 106-398, section 1223, Oct. 30, 2000.

2

See Military Readiness: Effects of a U.S. Military Presence in Europe on Mobility 

Requirements (GAO-02-99, Nov. 28, 2001).

3

European NATO countries include Belgium, the Czech Republic, Denmark, France, 

Germany, Greece, Hungary, Iceland, Italy, Luxembourg, the Netherlands, Norway, Poland, 

Portugal, Spain, Turkey, and the United Kingdom.

4

European Union members include Austria, Belgium, Denmark, Finland, France, Germany, 

Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the 

United Kingdom.
Executive Summary

Page 4 GAO-02-174 European Security

defense spending by all European NATO members in 2000. We included 

Turkey because of its unique security environment and the critical role it 

plays in an unstable region. We also reviewed NATO, European Union, 

World Bank, United Nations, Organization for Security and Cooperation in 

Europe, and Organization for Economic Cooperation and Development 

documents, and we spoke with officials from these institutions. While we 

do not attempt to construct a balance sheet of U.S. and European 

contributions in this report, we have identified emerging trends in military 

and nonmilitary contributions to European security. The data used in this 

report reflect information collected before the Department of Defense 

(DOD) completed its Quadrennial Defense Review and before the 

September 11, 2001, terrorist attacks. The ways in which the United States 

and its European allies respond to these events will affect U.S. and 

European interests, military force postures, and budget priorities. 

However, it is too early to discern how these will be affected. 

Background During the Cold War, the United States and its NATO allies invested heavily 

in warfighting and combat support assets to protect the alliance against the 

threat of Soviet aggression. In the mid-1980s, European NATO allies had 

approximately 3.6 million military personnel deployed to repel a full-scale 

attack on NATO’s European fronts by the Soviet Union. NATO and its 

members funded the development and maintenance of infrastructure such 

as aircraft shelters, prepositioned weapon depots, and fuel distribution 

networks to support the presence of large armored ground forces and fightin-place air units to defend NATO borders. NATO countries relied heavily 

on the civilian population for logistical support if war were to occur. 

The end of the Cold War produced dramatic changes in Europe’s 

geopolitical order. Twelve Newly Independent States (NIS) emerged as 

autonomous nations, and countries in Central and Eastern Europe (CEE) 

were freed from Soviet domination. Rapid economic and political changes 

have transformed the European security environment. New security 

threats have emerged over the past decade, while at the same time many 

former Soviet satellites have made the transition to democratic 

governments. In the face of dwindling resources in the former Soviet states, 

the infrastructure for maintaining nuclear arsenals has degraded, thus 

increasing the risk of the diversion of nuclear weapons technology to 

“rogue” states or terrorist groups.

The Balkans conflict has exemplified the new European security 

landscape. The secession of Croatia and Bosnia sparked a protracted civil 
Executive Summary

Page 5 GAO-02-174 European Security

war in the early 1990s, as armed factions fought to have ethnically pure 

populations. During the late 1990s, conflict erupted in Kosovo between 

Kosovar Albanian insurgents, who were fighting for the independence of 

Kosovo, and Yugoslav forces, fighting to retain Yugoslavia’s sovereignty 

over the province. The most recent Balkans crisis erupted in the Former 

Yugoslav Republic of Macedonia in early 2001, over the issue of obtaining 

greater rights for minority ethnic Albanians. These crises exacted a heavy 

humanitarian toll and created hundreds of thousands of refugees and 

internally displaced persons. The missions that Europeans undertook to 

address these crises, which required their forces to operate beyond NATO’s 

borders and in areas with little or no supporting infrastructure, highlighted 

shortfalls in their military capabilities.

Results in Brief A new European security environment has emerged since the end of the 

Cold War, with the United States and its European allies using smaller 

militaries, disbursing more development assistance, and increasing their 

reliance on multilateral organizations to provide the foundation for 

European security. The European NATO allies have drawn down their 

military forces from 3.5 million in 1990 to about 3 million in 2000, while the 

United States has reduced its forces in European NATO countries from 

300,000 to just over 100,000. Both reduced their defense budgets during 

this time period. Despite reductions in force levels and budgets, U.S. and 

European military forces have been actively engaged in peacekeeping and 

other security-enhancing activities in the region. During the 1990s, the 

United States and its allies increasingly used economic tools such as 

development and nonproliferation assistance to shape the European 

security environment. The European allies provided most of the 

development assistance to Central and Eastern Europe and to the states of 

the former Soviet Union, providing about $47 billion of the $71 billion 

disbursed from 1990 through 1999. The United States has funded the 

preponderance of nonproliferation and threat-reduction programs, 

allocating more than $5.5 billion of the more than $6 billion total during the 

same period. Adapting to the new security environment, multilateral 

organizations such as NATO and the European Union have redefined and 

expanded their roles. NATO and the European Union are in the process of 

enlarging their organizations to incorporate former Warsaw Pact nations as 

members. The accession programs of both organizations enhance security 

and stability in the region by promoting democracy, stable borders, freemarket economies, and military reform.
Executive Summary

Page 6 GAO-02-174 European Security

The United States and its European allies have contributed to stability in 

the Balkans through a variety of military and financial means, reflecting 

their differences in national interests, priorities, and military capabilities. 

The United States provided most of the tactical air combat capabilities to 

end hostilities in the region, while the European allies provided most of the 

peacekeeping troops and disbursed more than $10 billion of the almost $15 

billion in development assistance. For example, during Operation Allied 

Force, the spring 1999 NATO air operation in Kosovo, the United States 

provided 70 percent of the total aircraft and performed more than 60 

percent of the total sorties flown. Although the United States provides the 

single largest contingency of ground troops, as of March 2001 the European 

allies were providing more than 60 percent of the roughly 57,000 military 

troops and most of the special constabulary forces deployed to support 

NATO-led operations in Bosnia and Kosovo. U.S. and European military 

officials noted that the benefits of multinational operations outweigh the 

drawbacks. They also emphasized that effective crisis management 

depends upon joint U.S. and European participation in the full range of 

peace support operations and post-conflict reconstruction efforts.

The Balkans operations have highlighted numerous shortfalls in the 

military capabilities of European allies, but decisions concerning 

competing budgetary priorities may limit their ability to remedy these 

shortfalls before the end of the decade. Structural weaknesses in European 

defense forces, particularly in mobility, command and control, and force 

composition, have prompted the allies to launch efforts to restructure and 

modernize their militaries, as well as to move toward all-volunteer forces. 

Of particular note are the European allies’ plans to procure critical aircraft 

to improve strategic lift capability and to field a 60,000-strong European 

Union force for deployment to humanitarian, peacekeeping and peace 

enforcement, and evacuation operations within 60 days. Although these 

initiatives demonstrate the commitment of European countries to assume 

greater responsibility for security in their region, it is unclear whether they 

will allocate the resources to pay for them. Defense expenditures are 

expected to remain relatively flat in constant 2000 dollars over the next 4 to 

5 years for most European allies, placing major defense initiatives 

sponsored by NATO and the European Union in jeopardy. European allies 

are pursuing multinational cooperation in procurement, operations, and 

other areas as a way to increase their defense capabilities and improve 

their return on investment. It is too early to tell whether European allies 

will shift their priorities and devote a larger percentage of their national 

budgets to defense spending as a result of the September 11, 2001, terrorist 

attacks. 
Executive Summary

Page 7 GAO-02-174 European Security

GAO’s Analysis

Post-Cold War Environment 

Drives Contributions to 

European Security in New 

Directions

U.S. and European military forces continue to contribute to security and 

stability in Europe, even though the number of their military forces and the 

defense budgets that support these forces have been reduced. From 1990 

through 2000, the United States reduced its force levels in European NATO 

countries by about 65 percent, from about 300,000 to just over 100,000 

active duty military personnel. At the same time, European NATO countries 

reduced their forces by about 15 percent, from 3.5 million to 3 million. U.S. 

and European NATO allies’ defense budgets have declined and then leveled 

off since 1990, falling to 2.9 percent of GDP in 2000 for the United States 

and 2.0 percent for the European allies. In 2000, the cost to the United 

States of supporting its military presence in European NATO countries, 

including permanent personnel and supporting infrastructure, was $11.2 

billion, a 50-percent decline from 1990. 

Since the end of the Cold War, the United States and its European allies 

have increasingly used economic means to shape the European security 

environment. The European Commission5

 and European allies have 

provided most of the development assistance6

 to Central and Eastern 

Europe and the Newly Independent States during this period, and the 

United States has provided most of the nonproliferation assistance. The 

European Commission and European allies, leading donors of development 

assistance to Central and Eastern Europe and the Newly Independent 

States, provided about $47 billion of the just over $71 billion of total 

development assistance disbursed to these regions from 1990 through 1999. 

This aid supported economic and political reforms critical to European 

Union enlargement. As the second-largest bilateral donor to the Newly 

Independent States, the United States spent about $10.7 billion from 1990 

through 1999 to support the transition to democracy and free-market 

5

The European Commission, the European Union’s executive agency, manages the 

European Union’s multilateral development agencies and is responsible for its external 

assistance programs.

6

The Organization for Economic Cooperation and Development defines official 

development assistance as financial flows to developing countries and multilateral 

institutions that are provided by official agencies and that meet two conditions: (1) must 

promote economic development and welfare of developing countries as its main objective, 

and (2) must be concessional in character and convey a grant element of at least 25 percent.
Executive Summary

Page 8 GAO-02-174 European Security

economies. Over the same period, the United States spent about $6 billion 

for similar programs in Central and Eastern Europe.

NATO and the European Union have responded to Europe’s evolving postCold War order by changing and expanding their missions to better address 

post-Cold War challenges and by expanding their membership to integrate 

former Warsaw Pact nations. NATO has redefined its strategic objectives 

to address post-Cold War security challenges. This includes focusing on a 

wider set of threats and taking a more active role in preventing and 

managing regional crises, such as those in the Balkans. The European 

Union has developed a Common Foreign and Security Policy to 

complement its economic policy and enhance the credibility of its 

diplomacy. A key element of this policy is the European Union’s decision to 

develop a military component to respond to regional conflicts when NATO 

chooses not to be involved. NATO and the European Union also use their 

respective enlargement processes to contribute to regional stability. The 

possibility of membership in either or both institutions serves as an 

important incentive for aspirant nations to develop free-market economies, 

stabilize their borders, and reform their militaries. NATO’s Partnership for 

Peace program7

 plays a key role in developing the military capabilities and 

reforming the defense establishments of the participating partner states, 

and in increasing the interoperability among NATO allies and partners. U.S. 

and European officials stated that enlargement represents the European 

Union’s most significant contribution to regional security. The European 

Union plans to spend as much as $60 billion from 2000 to 2006 for pre- and 

post-accession programs. U.S. and EU officials have identified the 

increased trade flows among Central and Eastern Europe and European 

Union nations and sharp growth in foreign direct investment to the Central 

and Eastern European region as indications that the European Unionsupported reforms are having positive effects.

The United States continues to obtain a range of political and operational 

benefits from its military presence in Europe.8

 These include leadership 

7

NATO established the Partnership for Peace in 1994 to increase defense cooperation with 

nonmember European countries, particularly with former Warsaw Pact members and other 

former Communist states in Central and Eastern Europe. NATO also established a 

Membership Action Plan to assist countries that wish to join the Alliance, providing them 

with advice, assistance, and practical support in all aspects of NATO membership.

8

DOD defines overseas presence as the mix of permanently stationed forces, rotationally 

deployed forces, temporarily deployed forces, and infrastructure required to conduct the 

full range of military operations.
Executive Summary

Page 9 GAO-02-174 European Security

and influence in NATO, a visible demonstration of its dedication to 

European security and stability, and a firmer ground from which to call on 

the support of allies in a crisis. From an operational standpoint, the United 

States can deploy its forces more quickly in certain cases—both within 

Europe and elsewhere—and can influence the development of European 

capabilities through cooperation with regional militaries, training, and 

other engagement activities. U.S. military officials and data show that 

these forward-deployed forces reduce the cost and deployment time to 

certain regional conflicts. Representatives from major research 

organizations, however, argue that basing large numbers of forces in 

Europe reduces strategic flexibility because those forces are committed to 

Europe and are not available elsewhere. These representatives have also 

raised questions about the size and positioning of the current force 

presence in the absence of clear military threats.

Complex Balkans Security 

Environment Addressed 

With Broad Range of 

Military Interventions and 

Nonmilitary Assistance

The most significant U.S. military contributions to security in the Balkans 

have been air combat capabilities and ground troop presence. The United 

States provided 70 percent of total aircraft and flew more than 60 percent 

of the 37,000 strike and support sorties in Operation Allied Force. The 

United States also led critical support sorties by providing intelligence and 

reconnaissance, intra-theater airlift, air-refueling, and special operations 

capabilities. U.S. and European military officials noted that the United 

States dominated in these areas because our NATO allies had limited 

capabilities and equipment, particularly in avionics, precision-guided 

munitions, and tactical communications. U.S. military officials said, 

however, that the success of the NATO air campaign was greatly facilitated 

by European NATO countries’ provision of 22 military airbases in 8 

different countries. 
Executive Summary

Page 10 GAO-02-174 European Security

European allies made key military contributions to restoring stability in the 

Balkans by collectively providing the largest number of ground troops to 

support U.N and NATO operations. From 1992 to 1995, European allies 

provided about 50 percent or more of the ground troops to support U.N. 

peacekeeping operations. In 1995, the European allies shifted the focus of 

this support from U.N. peacekeeping operations to NATO-led operations. 

From 1996 to March 2001, the European allies provided between 56 and 70 

percent of the NATO ground troops. The United States began providing 

troops for NATO operations in 1996, and it has provided the largest single 

national contingency to operations in Bosnia and Kosovo—about 20 and 15 

percent, respectively, in March 2001.9

 European allies, primarily through 

Italy’s Carabinieri, have provided specially trained constabulary forces to 

assist in stabilizing the region. These forces have capabilities that go 

beyond those of typical police officers, and they have been particularly 

beneficial in riot control and other sensitive situations in which the use of 

combat forces is not appropriate. Italy’s Carabinieri represent the majority 

of NATO’s constabulary forces in the Balkans, including 75 percent of the 

500 used in Bosnia and more than 80 percent of the 320 used in Kosovo. 

Officials reported that multinational operations provide political and 

operational benefits and contribute to security in the region. Politically, 

operating as a coalition strengthens the alliance and provides international 

consensus when addressing security problems. Multinational operations 

also provide operational benefits that include the ability to combine the 

resources and capabilities of member states and to improve 

interoperability among allies. Despite multiple benefits, U.S. and European 

military officials noted that the deployment of multinational forces into 

areas of intense conflict also presents drawbacks and challenges. These 

include friction between coalition members with differing policies and 

strategies, interoperability problems arising from incompatible systems, 

and imbalances in equipment capabilities and inventories. Nevertheless, 

officials said that the benefits of multinational operations outweigh the 

drawbacks.

The European allies and the European Commission led donors in providing 

development assistance to the Balkans region. Of the almost $15 billion 

disbursed from 1993 through 1999, European allies and the European 

Commission provided $6.9 billion and $3.3 billion, respectively, while the 

9

Other countries, such as Russia and the United Arab Emirates, provided the remaining 

ground troops.
Executive Summary

Page 11 GAO-02-174 European Security

United States provided $1.2 billion. The European countries and the 

European Commission focused their assistance on humanitarian and 

economic reconstruction programs, while the United States focused on 

humanitarian assistance, economic restructuring, and programs to 

strengthen democratic institutions—for example, independent media and 

judiciary systems. European officials also identified the absorption of 

Balkans refugees into their countries as another significant contribution to 

European security.

European allies provided a large number of civilian personnel to support 

multilateral organizations that promote stable institutions and security in 

the region. For example, as of January 2001, European countries provided 

more than 2,000 civilian police to the United Nations. As of April 2001, they 

had provided about 500 people to the Organization for Security and 

Cooperation in Europe to perform tasks such as election monitoring, 

human rights education, media training, and legal and judicial reform, and 

another 139 people to support the European Union’s security-monitoring 

mission. The United States, on the other hand, provided the largest national 

contingency of personnel to the U.N. civilian police and to the Organization 

for Security and Cooperation in Europe—764 and 141 people, respectively.

European Militaries 

Addressing Shortfalls, but 

Decisions on Competing 

Budget Priorities Slow 

Implementation

Operational problems experienced in the Balkans peacekeeping operations 

in the 1990s highlighted numerous shortfalls in the military capabilities of 

European allies. On a national level, European countries are addressing 

some of these shortfalls by restructuring their military forces to become 

more deployable, by moving toward all-volunteer forces, and by 

modernizing their equipment, but progress has varied depending on each 

country’s ability to make defense spending a budget priority. 

Improvements in these three areas will give allies greater flexibility and 

capability to respond to a range of threats within and outside of Europe. 

The European allies we visited have made the greatest progress in 

restructuring their forces, which has meant changing the size and 

organization of their forces. For example, France, Germany, Italy, and the 

United Kingdom reduced their forces between 1990 and 2001 by an average 

range of 31 to 36 percent, and they are converting large, armored units into 

smaller and lighter infantry units that can respond to a range of threats. 

These countries have also developed rapid reaction units that can be 

deployed on short notice to operations within and beyond NATO’s borders. 

In addition, France, Germany, Italy, and the United Kingdom have 

established centralized operational commands to enhance cooperation 

among the branches of the military and thereby improve operational 
Executive Summary

Page 12 GAO-02-174 European Security

deployments and resource management. Large implementation costs and 

other budgetary considerations have slowed the European allies’ transition 

to all-volunteer forces and their modernization of equipment. Although an 

all-volunteer force will be more cost effective in the long run, more funding 

is needed up front to establish the system. In addition, limited funds have 

delayed or postponed European allies’ efforts to improve capabilities such 

as air- and sea lift; command, control, and communications; intelligence 

and reconnaissance; and precision-guided munitions systems.

Two recent NATO and European Union defense initiatives, launched after 

Operation Allied Force, provide additional focus and incentive for 

European nations to improve their defense capabilities. Although 

European NATO countries have made progress in meeting some of the 

goals, inadequate funding hampers the implementation of both initiatives. 

The first initiative, NATO’s Defense Capabilities Initiative, is a mechanism 

to highlight and promote needed improvements in five functional areas, 

using 58 long- and short-term objectives. The initiative has been 

incorporated into NATO’s defense-planning process. The second initiative, 

the European Union’s European Security and Defense Policy, is a broader 

political and security strategy to strengthen the European Union’s capacity 

for more effective crisis management, particularly when NATO as a whole 

chooses not to be involved. Both concepts aim to improve the European 

allies’ response to post-Cold War security challenges. Progress to date for 

both initiatives varies among countries, but nations have generally focused 

on goals that are easier to accomplish and less expensive, such as 

establishing logistics capabilities that can support multiple nations. NATO 

officials stated, however, that other items relating to improving a military’s 

deployability, mobility, and command-and-control capabilities are a long 

way from completion. Similarly, most U.S. and European government 

officials agree that the biggest challenge for the European Security and 

Defense Policy lies in equipping the 60,000 troops for sustained, highintensity military operations.

While European allies are committed to taking greater responsibility for 

regional security by planning to purchase critical aircraft and preparing to 

bring together a European Union rapid reaction force, most are hampered 

by relatively flat defense budgets. This limitation is brought about by 

decisions concerning competing domestic budgetary pressures, varying 

threat perceptions, and other national priorities. For example, Germany’s 

annual average real growth rate is projected to be -1.6 percent from 2000 

through 2004, while the United Kingdom’s annual average real growth rate 

is expected to increase by slightly less than 1 percent from 2000 through 
Executive Summary

Page 13 GAO-02-174 European Security

2003. Italy’s defense plans indicate a 4-percent annual average real growth 

rate for defense spending from 2000 through 2004. European budgets for 

major defense equipment have been of particular concern because they 

constitute the primary reason for shortfalls in defense capabilities 

identified in Balkans operations. While some nations, such as France and 

the United Kingdom, spent at least 20 percent of their defense budgets on 

equipment in 2000, Germany, Italy, and many other NATO countries spent 

less than 15 percent. In comparison, the United States spent at least 20 

percent of its defense budget on equipment in 2000. European allies have 

pledged to increase equipment spending over the decade; however, some 

nations are facing difficulty doing so. Germany’s annual average real 

growth rate for defense equipment is projected to be -1.3 percent in the 

years 2000 through 2004. According to budget projections from the United 

Kingdom, its annual average real growth rate for equipment is expected to 

increase by about 1.4 percent from 2000 through 2003. 

Budget challenges are attributable in part to structural problems inherent 

in the defense budgets of certain NATO countries. Chief among these 

problems is large personnel costs. Seven of the 19 NATO nations spent 60 

to 80 percent of their defense budgets on personnel in 2000. Fewer 

resources are thus available to buy new equipment. While European 

nations have devised interim measures to meet some of their defense 

requirements, such as leasing airlift aircraft, more funding will be needed to 

achieve the objectives of the Defense Capabilities Initiative and European 

Security and Defense Policy before the end of the decade. Some European 

NATO countries are pursuing multinational cooperation in procurement to 

share the financial burden of acquiring expensive systems and equipment, 

such as with the A400M military transport aircraft. However, funding 

availability is delaying this and other multinational projects. 

Concluding 

Observations

The breakup of the Soviet Union has prompted the United States and its 

European allies to use a much broader range of military and nonmilitary 

tools to foster security in the European region now than during the Cold 

War. In this new security environment, military contributions are no longer 

the sole mechanism for providing security. Development assistance to new 

or emerging democracies in Central and Eastern Europe, as well as the 

eastward expansion of NATO and the European Union, provide the second 

and third major tools for a secure and stable Europe. New trends in the 

military and nonmilitary contributions made by the United States and its 

European allies have emerged. Militarily, the United States leads its allies 

in providing combat capabilities to restore peace, as it did in the Balkans. 
Executive Summary

Page 14 GAO-02-174 European Security

European allies provide most of the peacekeeping forces and the 

preponderance of nonmilitary aid to the region. NATO’s focus on a wider 

set of threats and on the expansion of its membership to integrate former 

Warsaw Pact nations complements the role of the European Union, the 

leading source of nonmilitary assistance in the region through the 

European Commission, whose responsibilities and membership are also 

expanding. 

Despite these achievements and contributions, weaknesses in European 

defense capabilities—now and in the near future—mean that European 

allies will depend on the United States to provide key combat capabilities 

should a major conflict break out in the region. Given this situation, the 

United States will need to continue playing an important role in the 

European region, particularly in the area of military capabilities, at least 

until the end of the decade. 

Agency Comments In written comments in response to a draft of this report, the Department 

of State concurred with the report’s contents. These comments are 

presented in appendix IV. The Department of Defense provided oral 

comments and also concurred with the report’s contents. DOD and the 

Department of State also provided technical comments, which we 

incorporated where appropriate. 
Page 15 GAO-02-174 European Security
Page 16 GAO-02-174 European Security

Chapter 1

Introduction Chapte1r

During the Cold War, the United States and its North Atlantic Treaty 

Organization (NATO) allies invested heavily in warfighting and combat 

support assets to protect the alliance against the threat of Soviet 

aggression. In the mid-1980s, the number of U.S. forces stationed in 

Europe peaked at approximately 350,000 personnel. In addition, our 

European NATO allies had about 3.6 million military personnel deployed to 

repel a full-scale attack on NATO’s European fronts by the Soviet Union. 

NATO and its members funded the development and maintenance of 

infrastructure to support the presence of large armored ground forces and 

air units to defend its borders.1

 With this presence came a heavy reliance on 

the civilian population for logistic support in the event that war were to 

break out. Although European NATO countries provided considerable 

financial and political support to the U.S. military presence, concerns over 

the relative magnitude of U.S. commitments to European security 

provoked recurrent debates about burdensharing among American 

policymakers throughout the Cold War. In 1981, Congress required that the 

Department of Defense (DOD) report annually on the Allies’ contributions 

to NATO and to other regional defense and security institutions elsewhere 

in the world.2

The end of the Cold War produced dramatic changes in Europe’s 

geopolitical order. Twelve Newly Independent States (NIS) emerged as 

autonomous nations, but many of these nations have maintained 

diplomatic and economic ties to Russia through membership in the 

Commonwealth of Independent States.3

 After Communist state institutions 

in Central and Eastern European (CEE) countries collapsed, members of 

NATO’s principal adversary, the Warsaw Pact alliance, began to elect 

governments democratically and to establish market-oriented economies.4

New national boundaries and the adoption of new political and economic 

1

Infrastructure includes aircraft shelters, prepositioned weapon depots, and fuel 

distribution networks. 

2

Subsequent revisions of burdensharing-reporting requirements occurred in the 1984 and 

1997 National Defense Authorization Acts, as well as the 2000 Department of Defense 

Military Construction Appropriations Act. 

3

The Newly Independent States include the former Soviet Republics of Armenia, Azerbaijan, 

Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, 

Ukraine, and Uzbekistan. The three Baltic republics—Estonia, Latvia, and Lithuania—

declared independence prior to the Soviet Union’s official dissolution on December 25, 1991.

4

The CEE nations include Albania, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, 

Lithuania, Poland, Romania, and the Slovak Republic.
Chapter 1

Introduction

Page 17 GAO-02-174 European Security

systems have transformed the European security landscape. Former Cold 

War adversaries have cultivated commercial and economic relationships 

with the West, and three former Warsaw Pact states joined NATO in 1999.5

This rapid economic and political transformation has altered the security 

environment across Europe. Although NATO remains committed to its 

mission to defend the Alliance against external enemies, the dissolution of 

the Soviet Union dramatically reduced NATO’s vulnerability to 

conventional attack. However, new threats have emerged over the past 

decade. The creation of new states and the dismantling of old institutions 

aggravated ethnic and economic tensions within and between nations. 

Former Communist nations have struggled to establish democratic 

institutions against pressure from the leaders and supporters of the old 

authoritarian order. Financial, administrative, and judicial institutions 

often lack competent personnel and sufficient resources to successfully 

combat public sector corruption and organized crime. In the face of 

dwindling resources in the NIS, the Soviet infrastructure for maintaining its 

nuclear arsenals has degraded, increasing the risk of environmental 

damage, the opportunity for diversion of nuclear weapons technology to 

“rogue” states or terrorist groups, and the potential for accidental or 

unauthorized use of nuclear weapons.

Since the dissolution of the former Yugoslavia, the Balkans6

 region has 

exemplified a worst-case scenario in the new European security landscape. 

The secession of Croatia in 1991 and Bosnia in 1992 resulted in a protracted 

civil war, as armed factions fought to have ethnically pure states. Albania’s 

1997 financial crisis precipitated the government’s collapse and sparked 

riots and armed revolts that reportedly caused more than 2,000 deaths. 

Early in 1998, conflict erupted in Kosovo between Kosovar Albanian 

insurgents, who were fighting for the independence of Kosovo, and 

Yugoslav forces, most of whom were Serbian, fighting to retain Yugoslavia’s

sovereignty over the province. In February 2001, ethnic fighting erupted in 

the Former Yugoslav Republic of Macedonia between ethnic Albanian rebel

forces and Macedonian authorities over the issue of obtaining greater 

5

They are the Czech Republic, Hungary, and Poland.

6

For the purpose of this report, the Balkans region is defined as Albania, Bosnia, Croatia, the 

Federal Republic of Yugoslavia (Serbia, Montenegro, and the Serbian province of Kosovo, 

hereafter referred to as Yugoslavia), and the Former Yugoslav Republic of Macedonia. 

Bosnia’s official name is Bosnia and Herzegovina. The Socialist Federal Republic of 

Yugoslavia, which dissolved in 1991, is referred to in this report as the “former Yugoslavia.”
Chapter 1

Introduction

Page 18 GAO-02-174 European Security

rights for minority ethnic Albanians. These crises exacted a heavy 

humanitarian toll and created hundreds of thousands of refugees and 

internally displaced persons. Although NATO and United Nations (U.N.) 

peacekeeping forces have been critical to containing and preventing 

further violence in the region, these nations’ civic institutions remain weak, 

and many former combatants retain their wartime objectives. In Bosnia 

and Kosovo, the international community oversees local political and legal 

institutions and pays for extensive development projects to rehabilitate the 

region’s infrastructure and economic institutions. 

NATO allies and partners have responded to changing threats through a 

combination of military and nonmilitary strategies aimed at preventing and 

containing instability in the region. The 1991 NATO strategic concept, 

which was updated in 1999, called for the allied militaries to adopt light, 

mobile forces that can respond rapidly to a broad spectrum of 

contingencies. The 1999 Defense Capabilities Initiative (DCI) established 

new standards for NATO forces, better reflecting the new types of conflicts 

they may face in a dynamic threat environment. The United States has 

responded to the reduced threat in part by drawing down personnel levels 

on the European continent to approximately 100,000. Many European allies 

have likewise downsized their forces and cut defense expenditures, and a 

few have implemented defense-restructuring programs. Civil-military 

outreach initiatives such as the NATO Partnership for Peace (PfP) 

emphasize greater cooperation and engagement between the militaries of 

former adversaries. The NATO enlargement process encourages the 

institutional development of partner states by emphasizing respect for 

human rights, transparent public institutions, and civilian control of armed 

forces. NATO efforts to promote stability in former Warsaw Pact nations 

are complemented by U.S. and European bilateral economic aid and 

technical assistance for good governance, economic restructuring, and 

nonproliferation programs.

The European Union (EU) has developed a common foreign and security 

policy to complement its economic power and to raise its visibility in 

international and regional affairs. This policy represents a new effort by 

the EU to formulate foreign policy positions that best represent the 

interests of the EU and its member states. Under this policy, the EU has 

taken an active diplomatic role in successive Balkans crises and is working 

with NATO officials to broker peace in the Former Yugoslav Republic of 

Macedonia. A central element of this policy is the European Union’s 

development of a military component to respond to post-Cold War threats 

when NATO chooses not to be involved, thereby enhancing the credibility 
Chapter 1

Introduction

Page 19 GAO-02-174 European Security

of EU diplomacy. Progress in building defense capabilities depends in 

large part on the ability of EU member states to provide adequate resources 

for military requirements, as discussed in chapter 4.

European multilateral institutions have adapted to the post-Cold War 

environment by transforming their functions and developing connections 

with peer institutions. Initiated in 1973, the Conference on Security and 

Cooperation in Europe has since evolved from a forum for arms control 

negotiations into the Organization for Security and Cooperation in Europe 

(OSCE), an association that manages a range of programs throughout 

Europe and Central Asia relating to conflict prevention and early warning, 

crisis management, and post-conflict rehabilitation. Activities include, for 

example, election monitoring; developing democratic institutions, 

processes, and mechanisms; and police monitoring.7

 Given its expanded 

role in European security, the OSCE has coordinated its programs with 

other international organizations, such as the EU, the United Nations, and 

NATO. During the Cold War, the EU concentrated its efforts on the 

economic integration of Western European nations. However, the EU has 

recently played a more visible international role through its Common 

Foreign and Security Policy (CFSP) and is currently developing a European 

Security and Defense Policy (ESDP) to enhance its military and civilian 

crisis-response capabilities. EU enlargement, another significant foreign 

policy activity, offers substantial economic and technical assistance to 

accession candidates to support democratic and free-market reform.

Objectives, Scope, and 

Methodology 

In response to the Floyd D. Spence National Defense Authorization Act for 

Fiscal Year 2001 mandate requirement, we identified and assessed (1) U.S. 

and European military and nonmilitary contributions to security and 

stability in the European region, (2) U.S. and European military and 

nonmilitary contributions to security and stability in the Balkans, and (3) 

the status of NATO and European defense initiatives to improve military 

capabilities for conflict management. In addition, we also summarized the 

results of a companion GAO report concerning the effects of forwarddeployed U.S. forces in Europe on mobility requirements in the event of a 

regional conflict in Europe or the Middle East.8

 The data used in this report 

reflect information collected before the Department of Defense completed 

7

OSCE members include 55 countries across Europe, Central Asia, and North America. 

8

See GAO-02-99, Nov. 28, 2001.
Chapter 1

Introduction

Page 20 GAO-02-174 European Security

the Quadrennial Defense Review and before the terrorist attacks of 

September 11, 2001. The way in which the United States and its European 

allies respond to these events will affect U.S. and European interests, 

military force postures, and budget priorities. However, it is too early to 

discern what the effects will be. DOD issued the Quadrennial Defense 

Review report on September 30, 2001, and we summarize pertinent 

information about overseas presence in our report. DOD is now engaged in 

the program and budget review and is conducting follow-on analysis 

regarding overseas presence and other related issues, particularly in light 

of the events of September 11, 2001.

To meet our objectives, we analyzed a range of documents and interviewed 

numerous military and civilian officials from the United States and five 

European allies.9

 We focused on France, Germany, Italy, and the United 

Kingdom because they accounted for nearly 70 percent of the total gross 

domestic product and defense spending by all European NATO members in 

2000. We also focused on Turkey because of its unique security 

environment and the critical role it plays in an unstable region. We visited 

these countries in March 2001 and met with officials from the respective 

countries’ embassies in Washington, D.C. In addition, we met with officials 

from NATO’s Supreme Headquarters Allied Powers, Europe (including the 

Supreme Allied Commander); the EU; the OSCE; the Organization for 

Economic Cooperation and Development (OECD); and the United States 

European Command. We worked closely with officials at the Department 

of Defense and Department of State in Washington, D.C., and at the U.S. 

embassies in the countries we visited. We also reviewed documents and 

interviewed officials from the World Bank and the United Nations. Finally, 

we interviewed analysts at numerous think tanks in the United States and 

Europe, including the Brookings Institution, the Center for Strategic and 

International Studies, the Center for Strategic and Budgetary Assessments, 

and the CATO Institute, all in Washington, D.C.; the Institute for Security 

Studies of the Western European Union, in Paris; the Institute of 

International Affairs, in Rome; the Konrad Adenauer Institute, in Berlin; 

and the Centre for European Reform and Royal United Services Institute 

for Defense Studies, in London.

To address the first objective, we collected and analyzed DOD and NATO 

reports that identified U.S. and European troop strengths, the costs of 

9

For this report we define European allies to include European NATO and/or European 

Union member nations, plus Switzerland. 
Chapter 1

Introduction

Page 21 GAO-02-174 European Security

permanently stationing U.S. military forces in Europe, and the costs of 

deploying and supporting U.S. forces in regional contingencies, such as in 

the Balkans. To identify financial and other contributions that our 

European allies provide to maintain the U.S. forces in Europe, we obtained 

and assessed reports on direct and indirect host country support, including 

the DOD Allied Contributions report.10 We discussed these costs with U.S. 

and host country officials. These officials also identified other 

unquantifiable costs associated with hosting U.S. troops in European 

countries. We relied on NATO defense budget data to identify the historical 

defense-spending trends of NATO allies.

We identified and assessed the political, military, and economic benefits 

and drawbacks of maintaining a U.S. military presence in Europe by 

analyzing government and nongovernment studies and by discussing these 

issues with a wide range of U.S. and European civilian and military 

officials. 

We identified key nonmilitary financial contributions to Central and 

Eastern Europe and the Newly Independent States by relying on 

development assistance and nonproliferation assistance data. 

Development assistance includes grants and concessional loans that have a 

grant element of at least 25 percent that are provided by national 

governments and multilateral organizations. We focused on contributions 

provided by the United States, European nations, and the European 

Commission—the leading multilateral donor of development assistance to 

Central and Eastern Europe and the Newly Independent States. We did not 

include nonconcessional loans, such as those provided by the World Bank 

and the International Monetary Fund, because these require repayment by 

the recipient country. Further, we did not include any private-sector flows 

to the region. For development assistance data from 1990 to 1999, we 

relied primarily on OECD’s Development Assistance Committee statistical 

database, which we converted to constant 1999 dollars. We use constant 

1999 dollars throughout the report, unless noted otherwise. We discussed 

the development assistance programs with the U.S. Department of State 

and with officials from the EU, the OECD, and the foreign affairs ministries 

of the countries we visited. We selected nonproliferation assistance as a 

way to quantify national and multinational efforts to address critical 

nonproliferation concerns in the Newly Independent States. To identify 

10Report on Allied Contributions to the Common Defense, Department of Defense, March 

2001.
Chapter 1

Introduction

Page 22 GAO-02-174 European Security

nonproliferation assistance to the NIS, we relied on reports provided by the 

EU and the Departments of Defense and Energy. We also met with 

European officials to discuss European objectives, priorities, trends, and 

future efforts, and relied on GAO reports for similar information on U.S. 

nonproliferation programs.11 We analyzed data available from 1992 to 2001.

We identified and assessed the contributions of NATO and the EU to 

security and stability in Europe in the post-Cold War decade by focusing 

primarily on their enlargement programs. We relied on recent GAO work 

on the NATO Partnership for Peace program, and we obtained documents 

from France, Germany, Italy, Turkey, and the United Kingdom that 

identified their Partnership for Peace activities with prospective NATO 

member nations.12 We obtained cost data from the EU and from economic 

databases to document the EU’s current and projected financial 

contributions to countries seeking EU membership, and those 

contributions’ effects on donor and recipient countries’ economies. We 

discussed these issues with U.S. and European officials and obtained their 

perspectives concerning the contribution of these enlargement programs to 

security and stability in Europe.

To address the second objective, we obtained and analyzed NATO and U.N. 

peacekeeping reports from 1992 to 2001 concerning the number and type of 

military personnel deployed in direct support of the Balkans peacekeeping 

operations. We also interviewed senior U.S., NATO, and European military 

and policy officials, to discuss the roles and contributions of the respective 

forces since 1992. We relied on past GAO work and on DOD and European 

reports to identify the military contributions of U.S. and European allies to 

Operation Allied Force. In interviews with U.S. and European civilian and 

military officials, we discussed the benefits and drawbacks of participating 

with our allies in regional contingency operations, such as in the Balkans. 

These U.S. and European officials, including former commanders of 

Balkans operations, provided valuable perspectives based on their 

personal experiences in the Balkans and other contingency operations.

We identified key nonmilitary financial contributions to the Balkans by 

relying on development assistance data from 1993 to 1999. We relied 

primarily on OECD’s Development Assistance Committee statistical 

11GAO-02-226T, Nov. 7, 2001.

12See NATO: U.S. Assistance to the Partnership for Peace (GAO-01-734, Jul. 20, 2001).
Chapter 1

Introduction

Page 23 GAO-02-174 European Security

database. We discussed these development assistance programs with the 

U.S. Department of State and with officials from the EU, the OECD, and the 

foreign affairs ministries of the countries we visited.

We focused on U.N. civilian police, OSCE, and EU Mission Monitoring 

programs to identify the number and type of nonmilitary personnel 

provided by donor countries that participated in the Balkans peacekeeping 

operations from 1992 to 2001. These three programs together represent the 

majority of civilian personnel temporarily provided by the United States 

and European countries to support the Balkans operations. We 

interviewed U.S., U.N., EU, and OSCE officials and reviewed agency 

documents to obtain the number of personnel assigned to the Balkans 

operations and their qualitative contributions. We obtained and analyzed 

data from the U.N. High Commission for Refugees (UNHCR) for statistics 

on numbers of refugees migrating from the Balkans to the U.S. and to 

European countries, and we discussed the numbers with various U.S. and 

European officials.

To address the third objective, we reviewed defense policy and budget 

documents from NATO, the EU, selected European countries, and the 

United States. We obtained reports addressing the status of defense reform 

and modernization efforts in France, Germany, Italy, Turkey, and the United 

Kingdom. We corroborated this information with European and U.S. 

officials. We reviewed NATO, EU, and U.S. documents on the status of 

NATO’s Defense Capabilities Initiative and the EU’s European Security and 

Defense Policy. We also interviewed a wide range of officials from NATO, 

the EU, selected European countries, the United States, and think tanks to 

obtain their perspectives on the progress of these security initiatives and 

their potential contribution to security and stability in Europe. 

To compare defense expenditures of NATO members on a historical basis, 

we first converted the NATO inflation-adjusted local currency figures to 

their 1995 U.S. dollar equivalents, using the 1995 U.S. exchange rate for 

each NATO member. We then applied the change in the U.S. gross domestic 

product (GDP) deflator from 1995 to 2000 to obtain defense expenditures 

for all members in constant 2000 U.S. dollars.13 We recognize that exchange 

13Our methodology is similar to the one NATO uses and to the one we used in our 1999 

report. NATO uses 1995 local currency defense-spending deflators and 1995 exchange rates 

to convert to 1995 dollars. However, NATO does not further convert 1995 dollar defense 

expenditures into year 2000 dollars, as we have done in this report.
Chapter 1

Introduction

Page 24 GAO-02-174 European Security

rate fluctuations may have a significant effect on the reported levels of 

defense spending after these currencies are converted to a common 

currency, such as the U.S. dollar. This is particularly true in periods when 

there are significant changes in exchange rates, such as occurred between 

the U.S. dollar and many European currencies during the 1995 to 2000 

period. The ratio of defense expenditures to GDP is a more consistent 

indicator of relative defense burdens or commitments, because it is not 

affected by exchange rate fluctuations. Therefore, we emphasize this ratio 

and the trend in defense expenditures in the domestic currencies in our 

discussion of defense burdens. 

To present unclassified information on future defense spending, we 

obtained spending projections for key budget components, such as 

personnel and equipment, and for total defense spending from the 

respective governments of Germany, Italy, the United Kingdom, and the 

United States.14 However, we found the data provided to us were not fully 

compatible with NATO data. To make our projections consistent with 

NATO’s historical defense expenditures and components, we calculated the 

rates of growth implied by the data that NATO member countries supplied 

us, and we used NATO information for the year 2000 as a base for our 

projections. We also used forecasts of gross domestic product from DRIWEFA—an economic consulting firm—to compute projected ratios of 

defense spending to GDP.15 To determine the future composition of 

defense expenditures for “personnel” and “equipment” categories, we 

applied the implied growth rate from the defense budget projections that 

NATO members provided us to the respective data from NATO for the year 

2000.

We discussed our methodology with DOD officials. DOD indicated that it 

preferred using year 2000 exchange rates and 2000 local currency defense 

spending deflators for converting the local currency defense expenditures 

into 2000 dollars. However, we did not use DOD’s suggestion, because 

NATO uses a methodology similar to ours, which uses 1995 exchange rates. 

Because some European currencies have been subjected to significant 

depreciation between 1995 and 2000, using 2000 exchange rates 

14NATO defense budget projections forecast for NATO members are classified.

15DRI-WEFA World Outlook Comparison Tables, Forecast Data, 2001, third quarter. The 

projected GDP figures may not reflect the economic shocks that have occurred since 

September 11, 2001.
Chapter 1

Introduction

Page 25 GAO-02-174 European Security

substantially lowers defense expenditure figures expressed in dollars for 

these European NATO members.
Page 26 GAO-02-174 European Security

Chapter 2

Post-Cold War Environment Drives 

Contributions to European Security in New 

Directions Chapte2r

The breakup of the former Soviet Union has prompted the United States 

and its European allies to use a much broader range of military and 

nonmilitary tools to foster security in the European region than were used 

in the past. The United States and its European allies have reduced their 

military forces and defense budgets since 1990, yet their forces have 

remained actively engaged in peacekeeping and other security-enhancing 

activities in the region during the post-Cold War period. The United States 

has reduced its military presence in Europe to a current level of about 

100,000 military personnel, which cost $11.2 billion to support in fiscal year 

2000. Increasingly, the United States and its European allies have used 

nonmilitary tools such as development and nonproliferation assistance to 

shape the regional security environment.1

 The type and level of assistance 

provided by each country reflects national interests, priorities, and threat 

perceptions. Since the end of the Cold War, multilateral organizations such 

as the European Union have also assumed wider responsibilities in shaping 

the security environment. In addition, NATO has begun to enlarge its 

alliance to include Central and Eastern European nations and has taken on 

important new missions, such as peacekeeping to help stabilize the 

Balkans. The European Union has developed a Common Foreign and 

Security Policy (CFSP), which uses a combination of political, military, and 

other measures to respond to regional crises. The enlargement of the 

European Union, whose accession programs are estimated to cost up to 

$60 billion from 2000 through 2006, is recognized by U.S. and European 

officials as a major investment in the region and as Europe’s most 

significant contribution to regional security and stability. 

Reduced U.S. and 

European Military 

Forces Provide 

Security Foundation in 

Post-Cold War Europe

Although the international security environment presents a diverse set of 

challenges very different from those of the Cold War, U.S. and European 

military forces still provide the foundation for security and stability in 

Europe. The number of U.S. and European military forces in Europe has 

declined since the end of the Cold War, as have the defense budgets that 

support these forces. 

1

OECD defines official development assistance as financial flows to developing countries 

and multilateral institutions that are provided by official agencies and meet two conditions: 

(1) must promote economic development and welfare of developing countries as its main 

objective, and (2) must be concessional in character and convey a grant element of at least 

25 percent. 
Chapter 2

Post-Cold War Environment Drives 

Contributions to European Security in New 

Directions

Page 27 GAO-02-174 European Security

Size and Cost of U.S. and 

European Forces in Europe 

Have Decreased Since the 

End of the Cold War

Since the end of the Cold War, the United States and European NATO 

countries have reduced the size of their military forces and their 

corresponding defense budgets. The United States reduced its active 

military forces by 32 percent between 1990 and 2000, and its forces in 

European NATO countries by 65 percent. The United States reduced its 

defense expenditures by approximately 25 percent during the same period. 

Meanwhile, European NATO countries reduced their active duty forces by 

about 15 percent during the post-Cold War decade, and reduced their 

defense budgets by 14 percent.

Size of U.S. and European Forces 

Has Declined

The United States has reduced its military presence in European NATO 

countries from about 300,000 permanently stationed Army, Air Force, Navy, 

and Marine personnel in 1990 to about 100,000 personnel in 2000, as shown 

in figure 1.2

 The size of the U.S. presence in Europe has declined since 1990 

in response to reduced threats in the region. U.S. personnel are stationed in 

NATO countries throughout Europe but are concentrated in five key 

countries, as shown in figure 2. In addition to the more than 100,000 

permanently stationed personnel, forces that are rotationally and 

temporarily deployed also contribute to the U.S. military presence in 

Europe. For example, most of the 12,000 naval forces afloat rotate from 

the continental United States. In addition, the United States deployed 

about 11,400 troops in 2000 to support Balkans peace support operations. 

The Balkans forces came from units stationed either in Europe or in the 

United States.

2

This reduction occurred in several steps. DOD initiated several studies in the early 1990s 

examining the scope of the U.S. military presence in Europe. The Congress also mandated 

in the National Defense Authorization Acts for fiscal years 1993 and 1995 that DOD maintain 

a presence of about 100,000 troops.
Chapter 2

Post-Cold War Environment Drives 

Contributions to European Security in New 

Directions

Page 28 GAO-02-174 European Security

Figure 1: U.S. Troop Strength in European NATO Countries, 1990-2000

Source: NATO. 
Chapter 2

Post-Cold War Environment Drives 

Contributions to European Security in New 

Directions

Page 29 GAO-02-174 European Security

Figure 2: Number of U.S. Military Personnel Permanently Stationed in Five European Countries, September 30, 2000

Source: DOD.

Infrastructure and prepositioned equipment are also part of the U.S. 

military presence in Europe.3

 As the United States has reduced the number 

of permanently stationed personnel in Europe, it has also returned bases 

and other facilities to European host nations. In 1991, the United States 

operated 858 European facilities; it now operates 241 facilities. Other 

facilities, such as communications centers, support a range of U.S. military 

activities in Europe and other regions. Prepositioned equipment facilitates 

the rapid reinforcement of personnel from the continental United States in 

3

Infrastructure includes the facilities that host or support U.S. military operations and 

activities, such as army bases, airbases, naval ports and naval air stations, training facilities, 

and communications facilities.
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the event of a crisis. Although the United States has reduced the scale of 

prepositioned equipment in Europe, it continues to maintain key 

prepositioned stocks, such as Army equipment for three heavy brigades 

and six Air Force airbase support sets. Finally, the U.S. en-route system of 

airbases supports its airlift aircraft in regional operations. 

European NATO countries have also reduced their military force numbers 

and supporting infrastructure over the past decade, but not to the extent 

the United States has. As discussed in chapter 4, some European countries, 

such as Germany, have taken longer to reduce their personnel numbers 

because they maintain conscription.4

 As shown in figure 3, European 

NATO nations reduced their active military forces by approximately 15 

percent between 1990 and 2000, from 3.5 million to about 3 million. Over 

the next 5 years these numbers could decline even further, as European 

nations look for savings that can be used to procure modernized weapon 

systems and equipment.

4

Conscription requires that citizens between certain ages serve in the armed forces for a 

period of time or provide alternative service to their country. In Germany’s case, for 

example, nearly half of its armed forces are conscripts.
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Figure 3: European Troop Strength in European NATO Countries, 1990-2000

Note 1: Years 1999 and 2000 include troops from the Czech Republic, Hungary, and Poland.

Note 2: NATO data were not available for 1991-1994.

Source: NATO.

Costs in Support of European 

Security Have Declined

U.S. and European defense budgets have provided the resources for postCold War defense-related activities in Europe. As shown in figure 4, U.S. 

and European defense budgets declined and then generally leveled off after 

1990. Similar trends exist with defense spending as a percentage of GDP, as 

shown in figure 5. While the United States still has a large defense 

budget—both in terms of total defense expenditures and as a percentage of 

GDP—the gap between U.S. and European defense budgets has narrowed 

during the post-Cold War decade.5

 European defense budgets primarily 

support European regional security, whereas only a portion of U.S. defense 

budgets supports U.S. security commitments in Europe. We were able to 

5

Turkey and Greece spent more on defense as a percentage of GDP than did the United 

States—4.5 and 4.9 percent, respectively, in fiscal year 2000. U.S. defense spending as a 

percentage of GDP was 2.9 percent in fiscal year 2000.
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discover the cost of maintaining U.S. personnel and supporting 

infrastructure in Europe; however, identifying the total cost of U.S. security 

commitments in Europe is more difficult, because some of this support 

comes from units and facilities located in the United States that have 

multiple mission responsibilities. 

Figure 4: Defense Spending by the United States and Selected European Countries, 

1980-2000

Note 1: Data from 1980 through 1995 were available only in 5-year increments.

Note 2: 2000 figures are NATO estimates. NATO will release actual figures in December 2001.

Source: NATO.
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Figure 5: Defense Spending as a Percentage of GDP for the United States and 

Selected European Countries, 1980-2000

Note: Data from 1980 through 1995 were available only as averages for 5-year increments.

Source: NATO.

The cost of supporting the U.S. military presence in Europe declined more 

sharply than did total U.S. defense expenditures between 1990 and 2000. 

DOD stated that for fiscal year 2000, the cost of supporting the U.S. military 

presence in European NATO countries, including permanent personnel and 

supporting infrastructure, was $11.2 billion. As shown in figure 6, this is a 

decline of about 50 percent from fiscal year 1990, when about $23 billion 

(in year-2000 dollars) supported about 300,000 troops. 
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Figure 6: Costs to Support U.S. Permanently Stationed Forces in Europe, 1990-2000 

Source: DOD.

About $7.3 billion, or 65 percent, of the current cost of supporting the U.S. 

military presence in Europe is targeted in Germany, where the United 

States continues to station about 70,000 troops. DOD defines the cost of 

overseas presence as the costs that each of the armed services incurs for 

personnel, operations and maintenance, military construction, and familyhousing construction and operations in each country where active-duty 

personnel are permanently stationed.6

 This does not include other costs, 

such as commissary activities and some depot maintenance for equipment. 

DOD budget officials stated that the overseas costs are not incremental 

costs and do not represent the potential savings of returning any or all of 

these forces to the United States. 

6

Defining U.S. overseas military costs is difficult because DOD budgets by service rather 

than by overseas country. DOD began calculating overseas presence costs in response to a 

mandate in the 1989 National Defense Appropriations Act to better account for the costs 

that it incurs in supporting overseas presence. In response, DOD developed the OP-53 

report, which identifies service-borne costs by country. The report also specifies the costs 

for DOD-wide functions such as health care, schools, and other activities not covered in the 

service budgets.
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In addition to the cost of supporting permanently stationed forces, the 

United States also incurs the costs of participating in contingency 

operations in Europe. U.S. forces based in Europe, together with U.S. 

forces drawn from the continental United States and elsewhere, have 

participated in various regional contingency operations, particularly in the 

Balkans region. DOD identified the incremental costs incurred during 

these contingency operations as those costs that would not have been 

incurred if it were not for the operation.7

 DOD has reported that from 1991 

through 2000, the United States spent $15.1 billion to support U.S. military 

involvement in the Balkans.8

 Together with the United Kingdom and 

Turkey, the United States has also participated in efforts to enforce the nofly zone in Northern Iraq from bases in Turkey under Operation Northern 

Watch. The incremental costs for U.S. participation in Operation Northern 

Watch have been considerably less than for the Balkans operations. 

Contingency costs for U.S. participation in that operation totaled about 

$600,000 from fiscal years 1997 through 2001.

During the Cold War, European NATO allies began to offset the cost to the 

United States for its military presence in Europe through direct assistance, 

such as host-country expenditures to support U.S. forces, and indirect 

assistance, such as tax exemptions. DOD reported that in 1999, European 

NATO countries provided about $2.3 billion in host-nation support.9

 

Germany, the largest contributor, provided about $1.4 billion of this total.

U.S. Military Presence in 

Europe Offers a Range of 

Benefits and Some 

Drawbacks

U.S. diplomatic and military officials stated that the U.S. military presence 

in Europe helps the United States achieve key political and operational 

objectives, including U.S. leadership and influence in the alliance, joint 

operations with European militaries, and response capability to crises in 

the region and elsewhere. These officials also identified certain strategic 

7

The principal categories include incremental pay for military personnel participating in 

contingency operations; other personnel support costs; incremental operating support costs 

for additional training, facilities, and other supplies; and operations-related transportation 

costs.

8

For DOD contingency operations costs, see Defense Budget: Need for Continued Visibility 

Over Use of Contingency Funds (GAO-01-829, July 6, 2001).

9

For DOD’s complete assessment of allied host-nation support and other responsibilitysharing issues, see DOD’s Report on Allied Contributions to the Common Defense, March 

2001.
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and operational drawbacks to maintaining the current U.S. military 

presence in Europe.

Political Benefits The U.S. military presence allows the United States to exercise political 

leadership and influence in the alliance. The United States has traditionally 

contributed and continues to contribute the greatest number of military 

personnel to the alliance. This is largely attributable to the more than 

100,000 permanently stationed U.S. forces in Europe and the dual-based 

forces stationed in the United States that are dedicated to NATO operations 

in the event of a crisis. According to a senior NATO official, NATO has 

traditionally acted under a principle of proportionality, in that the country 

contributing the greatest number of forces to the alliance receives the 

leadership position. Through these contributions, the United States has 

secured many top command positions, such as the Supreme Allied 

Commander, Europe. A U.S. military official said that the United States is 

thus able to guide the NATO defense planning process and to control a 

range of regional security operations and activities. 

Senior European officials stated that the U.S. military presence 

demonstrates that the United States remains dedicated to European 

security and stability. They said that a reduction of U.S. forces stationed in 

Europe below a certain level—which they did not specify—would call into 

question the U.S. commitment. This commitment to European security is a 

critical factor as EU nations move to organize a more independent defense 

posture, according to U.S. NATO officials. They stated that continued U.S. 

presence in Europe will provide greater assurance that the United States 

has a voice in the process, even though it is not a member of the European 

Union. The Supreme Allied Commander, Europe, stated that the U.S. 

military presence has had a steadying effect in a changing security 

environment, as West and East Germany reunited and the Central and 

Eastern European countries began their transition from authoritarian to 

democratic governments. A senior German diplomatic official said that the 

U.S. military presence provides the anchor for European security and 

stability and that it reinforces the image of the United States as the primary 

security guarantor. A senior Italian military official noted that the U.S. 

military presence added influence, weight, and credibility to the structure 

of the alliance.

Maintaining a military presence in Europe also makes it easier for the 

United States to call on its allies in the event of a crisis. For example, U.S. 

military officials stated that it would have been more difficult to call on 

European allies to host the large numbers of forces deployed from the 
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United States to Europe in support of Operation Allied Force in 1999 if the 

United States had not already had forces based in many of these countries. 

Operational Benefits U.S. European Command officials stated that U.S. forces stationed in 

Europe can generally respond to crises in Europe and adjoining regions 

more quickly than could forces deployed from the United States, since they 

are closer to areas of conflict. U.S. forces stationed in Europe were the 

first to be deployed in support of peacekeeping operations in Bosnia in 

1995 and Kosovo in 1999.10 In July 2001, U.S. Marine Fleet Anti-Terrorist 

Support Teams were deployed from Naples, Italy, to provide additional 

security during attacks against the U.S. Embassy in Skopje, the Former 

Yugoslav Republic of Macedonia. The U.S. European Command provided 

25,000 personnel to support NATO’s Operation Allied Force (and related 

humanitarian efforts in Albania and the Former Yugoslav Republic of 

Macedonia). As discussed in chapter 3, U.S. participation in Operation 

Allied Force was greatly facilitated by the network of U.S. and allied 

airbases in Europe. 

U.S. military presence also encourages improved interoperability between 

the United States and European NATO countries, and it enables the United 

States to influence the development of European military capabilities. 

Since the end of the Cold War, the United States has focused on 

cooperative activities with regional militaries.11 U.S. military officials 

argued that engagement activities, such as training foreign militaries in U.S. 

operating methods, are important because U.S. forces increasingly operate 

with a variety of countries in peacekeeping operations. Military officials at 

U.S. Naval Forces, Europe, added that, through overseas presence and 

frequent interaction, U.S. forces help shape other military forces and

10DOD officials said the U.S. Army in Europe plans to activate a second airborne battalion in 

Vicenza, Italy, starting in December 2001. The second airborne battalion will double the 

Army’s light infantry presence and forced entry capabilities in Europe, enhance U.S. forces 

in NATO’s southern region, and allow for simultaneous execution of noncombatant 

evacuation operations and maintenance of a rapid reaction force for the Balkans. Officials 

estimate that the activation will be completed by October 2003.

11According to DOD officials, these activities include 30 budget categories, ranging from 

naval ship visits and humanitarian relief operations to exercises with allies and non-allies.
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encourage the development of greater expeditionary capabilities.12 They 

also noted that another important benefit of having permanently stationed 

U.S. forces in Europe is to develop and foster relationships with foreign 

military units. Units deploying from the United States find that establishing 

these relationships is more difficult, given the relatively short time they 

spend in the European theater. 

One of the most important operational benefits of the U.S. presence in 

Europe is that the United States is able to respond faster to crises in 

neighboring regions and elsewhere in the world. U.S. facilities in Europe 

allow the United States to project personnel and equipment rapidly from 

the United States to other regions of the world—a key element of U.S. 

military strategy. The United States maintains a global network of 13 enroute airbases that facilitates the rapid deployment of forces from the 

continental United States to areas of conflict overseas. Six of these enroute airbases are located in Europe. The U.S en-route system of airbases 

is critical to operations in Europe and Southwest Asia. Without these 

bases, which provide refueling and other logistical support to U.S. airlift 

aircraft, it would be impossible to meet wartime requirements in Europe, 

the Middle East, and Southwest Asia.13

Military officials at the U.S. Central Command (the command responsible 

for U.S. military operations in Southwest Asia) said that en-route facilities 

and associated support personnel in Europe are critical to deploying U.S. 

forces to that region in the event of a crisis.14 They added that reducing the 

level of U.S. support in Europe would severely limit their ability to deploy 

forces in a crisis. U.S. prepositioned weapons and equipment in the 

European theater would allow the execution of military operations in 

nearby areas more quickly and at a lower cost than would using air-and 

sealift from the United States. According to officials at the U.S. Naval 

12DOD defines the term “expeditionary” as the capability of an armed force to accomplish a 

specific objective in a foreign country. The Commandant of the U.S. Marine Corps 

elaborated on this definition, stating that an expeditionary force needs to be agile, flexible, 

and rapidly deployable. It must be able to enter the objective area forcibly, sustain itself for 

extended periods, withdraw quickly, and reconstitute rapidly to execute follow-on missions. 

13For a more detailed discussion of these issues, see GAO report Military Readiness: Effects 

of a U.S. Military Presence in Europe on Mobility Requirements (GAO-02-99, Nov. 28, 

2001).

14European Command officials noted that prepositioned equipment in Europe also supports 

the rapid reinforcement of personnel from the United States in the event of a crisis.
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Forces, Europe, rotational naval forces in the Mediterranean can reach the 

Red Sea to conduct strike operations in Southwest Asia 9 days faster than 

forces deployed from the eastern United States. Air Force aircraft and 

personnel deployed in Europe allow forces to respond more quickly to 

address small-scale conflicts in the area and to reduce the burden on airlift 

and sealift, than if the units came from the United States. Likewise, Army 

combat and support units stationed in Europe allow forces to move to 

small-scale conflicts in the area more quickly and at lower cost. The Army 

can also move these units by land at a lower cost than that for transporting 

them from the United States. Similarly, U.S. military and diplomatic 

officials stated that U.S. participation in multinational efforts to enforce the 

no-fly zone in northern Iraq under Operation Northern Watch would be 

severely limited if the United States did not have access to Incirlik Airbase 

in Turkey.

Strategic Drawbacks Representatives from major research organizations in the United States 

and Europe identified certain strategic drawbacks to maintaining the 

current U.S. military presence in Europe in the absence of a clear military 

threat, such as the Soviet Union. Some representatives and certain U.S. 

military officials also identified drawbacks from the current positioning of 

forces in Europe. Their comments focused primarily on U.S. ground 

forces.

Representatives from U.S. research institutes said that although stationing 

U.S. forces in Europe strengthens the U.S. strategic position in Europe, 

these forces reduce the overall strategic flexibility of the United States 

because the forces are committed to Europe. They also noted that the level 

of presence required to achieve U.S. objectives in the region is not clear, 

and that a force level of somewhat less than 100,000 would not likely affect 

U.S. ability to respond to regional conflicts. Representatives of research 

institutes in Europe concurred with this point and said that, for example, a 

10-percent reduction in U.S. ground forces stationed in Europe would not 

affect the U.S.-European strategic relationship.

Research institute representatives also raised a related concern about the 

positioning of U.S. forces in Europe. The United States continues to station

most of its forces at facilities that were used in the Cold War, particularly 

those in Germany. These officials have argued that the United States 

should base more of its forces closer to areas of potential conflict, such as 

in the Mediterranean region or further east, in the Central and East
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European region.15 U.S. officials stated that although bases in Germany are 

closer to the Balkans than are those in the United States, it has 

nevertheless been a challenge to support peacekeeping operations in 

southeastern Europe.

Representatives from major research institutes identified financial and 

other drawbacks to maintaining the current level of U.S. military presence 

in Europe. A RAND study estimated that the U.S. units stationed in Europe 

would cost about 10 to 15 percent less if they were based in the United 

States. However, other representatives disagreed, stating that savings 

would occur only if all or a portion of U.S. forces in Europe were removed 

from the force structure, rather than returned to the United States. In an 

environment of scarce resources, certain critics also argue that the military 

presence in Europe could be reduced so that the resulting savings could be 

used more advantageously in other parts of the world. Further, several 

representatives from major research institutes stated that a large U.S. 

military presence in Europe creates a disincentive for Europeans to 

improve their own defense capabilities and shoulder more of the defense 

burden in Europe. Maintaining the current presence may hamper or 

discourage the European allies from taking greater responsibility for 

regional security, they said, because allies view the United States as the 

principal security guarantor in Europe. 

Quadrennial Defense Review The new administration examined a range of strategic issues, including the 

scope of U.S. military presence and activities overseas, as part of the 2001 

Quadrennial Defense Review. The Quadrennial Defense Review Report, 

issued in September 2001, states that the U.S. overseas presence, 

concentrated in Western Europe and Northeast Asia, is inadequate for the 

new strategic environment in which U.S. interests are global and potential 

threats are emerging in other areas of the world. The report further notes 

that a reorientation must take into account these new challenges. The 

report states that the United States will maintain its critical bases in 

Western Europe and Northeast Asia, and that these bases may also serve as 

hubs from which to address future conflicts in other parts of the world. 

The DOD report does not identify specific changes in the number of U.S. 

15Nevertheless, several factors may militate against permanently shifting forces from current 

locations in Europe, according to DOD officials. In negotiating the Founding Act on Mutual 

Relations, Cooperation, and Security between NATO and the Russian Federation (May 27, 

1997), NATO countries made a political pledge to Russia to refrain from developing new 

bases in former Warsaw Pact countries. Further, the cost of building new bases and 

facilities would be considerable, according to these officials.
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military personnel in Europe. DOD officials emphasized that it is still 

engaged in reviewing these and related issues, particularly in light of the 

attacks of September 11, 2001, and that the results of continuing studies 

and discussions will emerge at a later time.

Europeans Lead in 

Development 

Assistance to the 

Newly Independent 

States and Central and 

Eastern Europe, but 

the United States 

Spends More on 

Nonproliferation and 

Threat-Reduction 

Programs

Since the end of the Cold War, the United States and European allies have 

increasingly used nonmilitary tools such as development and 

nonproliferation assistance to shape the European security environment. 

Their use of these tools has been based on differing regional interests and 

priorities. The European Commission and European allies have led in 

contributions of development assistance to Central and Eastern Europe 

(CEE) and the Newly Independent States (NIS), together providing about 

$47 billion of the just over $71 billion of development assistance disbursed 

to these regions from 1990 to 1999.16

The European Commission and European allies led in contributions of 

development assistance to the NIS from 1990 to 1999, disbursing about $20 

billion of the approximately $35 billion provided by all donors during this 

period, as shown in figure 7.17 European country contributions to the NIS 

came mostly from Germany, which spent about $11 billion during this 

period. While this partly reflects the costs associated with repatriating 

ex-Soviet troops during the early 1990s, German officials stated that their 

government also regards Russia’s economic stability as a foreign policy 

priority and has invested heavily in technical assistance for private sector 

development and public administration reform. Other donor assistance 

supports Russia in rehabilitating social welfare services, such as public 

health and education.

16The European Commission, the executive agency of the European Union, manages EU 

multilateral development agencies and is responsible for EU external assistance programs.

17We did not include non-concessional loans.
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Figure 7: Development Assistance Totaling $34.7 Billion Disbursed to the Newly 

Independent States, 1990-1999

Note: B = billions.

Source: GAO analysis of OECD data. 

The European Commission and European allies were collectively the 

leading donors of development assistance to Central and Eastern Europe 

from 1990 to 1999. This assistance supported economic and political 

reforms critical to the EU enlargement process, which will be discussed 

later in this chapter. Together, they disbursed over $27 billion of the more 

than $36 billion in development assistance provided to the region, as shown 

in figure 8. Although European country contributions have declined since 

1995, this trend has been offset by increases in European Commission aid. 

European officials explained that national development assistance budgets 

have fallen in recent years because of fiscal constraints, and that 

governments have channeled development funding through multilateral 

institutions such as the European Commission. The rise in EC assistance to 

Central and Eastern Europe generally reflects this pattern, as does the 
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expansion of EC programs to prepare Central and Eastern European 

countries for EU membership.

Figure 8: Development Assistance Totaling $36.4 Billion Disbursed to Central and 

Eastern Europe, 1990-1999

Note: B = billions.

Source: GAO analysis of OECD data.

The United States regards stability among the Newly Independent States as 

vital to national security and has targeted a large portion of its development 

assistance funds to that region. As the second largest bilateral donor to the 

NIS, the United States spent about $10.7 billion from 1990 to 1999—nearly 

one-third of the development assistance provided to the NIS during this 

period. Supporting the former Soviet republics in their transition to 

democratic institutions and free-market economies is critical to U.S. 
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national security interests, according to the Department of State. U.S. aid 

to national governments in the region consists of financial and technical 

assistance for reforms in the political, judicial, and economic sectors. 

Direct aid to civil society benefits private enterprises, educational 

institutions, nongovernmental organizations, and municipal authorities. 

The United States supports comparable reforms in Central and Eastern 

Europe, and it allocated about $6 billion to the region from 1990 to 1999. 

As figure 8 illustrates, U.S. aid to the region has declined since the early or 

mid-1990s, falling from a peak of more than $2 billion in 1991 to less than 

$150 million in 1999. Funding decreased as the recipient countries made 

the transition to democratic societies and free markets, and no longer 

required development assistance. By the end of fiscal year 2000, 8 of the 15 

recipient countries no longer needed U.S. assistance, and the United States 

had shifted its focus to the countries of southeastern Europe.

The United States spent considerably more than the EU and its member 

states to control the spread of weapons of mass destruction.18 The United 

States allocated more than $5.5 billion to nonproliferation and threat 

reduction programs in the Newly Independent States from 1991 to 2001, as 

compared with the approximately $540 million spent by the EU and its 

member states. According to U.S. and EU officials, the relatively low levels 

of European funding for nonproliferation and threat reduction reflect 

different perceptions of threat. As a senior EU diplomat explained, the 

Cold War conditioned Europeans to perceive weapons of mass destruction 

primarily as an “East-West” concern, whereby the United States, as the 

leader of the West, bore most of the burden in addressing the issue. 

Nevertheless, he stated that the establishment of a Nonproliferation and 

Disarmament, Weapons of Mass Destruction, group within the Commission 

indicates the EU’s growing concern over the threats posed by weapons of 

mass destruction. The group is working to raise awareness among the 

European Union and its member states about the proliferation of nuclear, 

biological, radiological, and chemical weapons.

18Weapons of mass destruction include nuclear, biological, radiological, and chemical 

weapons.
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NATO and the EU 

Adapt Objectives and 

Policies to a Changing 

Strategic Environment

NATO and the EU have responded to Europe’s evolving post-Cold War 

order by redefining and expanding their roles and objectives. Despite 

institutional differences, the activities of NATO and the EU complement 

each other to strengthen the economic, political, and military dimensions 

of regional security and stability. Founded as a defensive alliance, NATO 

has revised its strategic concept to respond to the broader spectrum of the 

threats now facing greater Europe—those ranging from traditional cases of 

cross-border aggression to interethnic conflicts and acts of terrorism. 

Furthermore, NATO is facilitating the integration and eventual membership 

of Central and Eastern European nations in the transatlantic security 

community. The EU has likewise emphasized regional integration as being 

key to a safe and stable Europe, particularly through the deepening of 

political and economic ties among current members and through extending 

EU membership to CEE countries.

NATO and the EU Use 

Enlargement Programs to 

Enhance Regional Stability 

According to U.S. and European officials, the largely complementary NATO 

and EU enlargement efforts will make important contributions to regional 

security and stability. As a military alliance, NATO contributes to regional 

security by offering new members an explicit collective defense guarantee 

in the event that they are attacked.19 This guarantee discourages potential 

aggressors from attacking any member because it would prompt an 

alliance-wide response. Even though the European Union does not have a 

similar collective defense guarantee, both U.S. and EU officials pointed out 

that the political and economic integration of CEE nations into the 

European Union—and the development of common institutions and 

policies—also contributes to regional security and stability.

U.S. and European officials stated that the EU accession criteria and NATO 

expectations for aspirant members enhance stability because they require 

potential members to make important reforms in support of democracy, 

rule of law, and stable borders, as illustrated in figure 9. U.S. and European 

officials noted that the possibility of membership in either or both 

institutions serves as an important incentive for aspirant nations to 

19GAO has completed numerous studies examining the implications of NATO enlargement 

for the United States and the Alliance. See NATO Enlargement: Requirements and Costs 

for Commonly Funded Budgets (GAO/NSIAD-98-113, Mar. 6, 1998); NATO Enlargement: 

Cost Estimates Developed to Date Are Notional (GAO/NSIAD-97-209, Aug. 18, 1997); and 

NATO Enlargement: U.S. and International Efforts to Assist Potential New Members 

(GAO/NSIAD-97-164, June 27, 1997).
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undertake these reforms. For example, NATO and the EU require that 

countries seeking membership in either or both organizations must 

demonstrate that they have firm civilian control of the military and are not 

engaged in regional conflicts. Aspirant nations must also support 

democratic values and rule of law through transparent elections, 

autonomous judicial institutions, and protection of minority rights. 

Furthermore, the EU accession process fosters prosperity by supporting 

candidates’ efforts to promote private enterprise, improve financial-sector 

transparency, and ensure macroeconomic stability. Outreach activities 

conducted in support of each institution’s enlargement have reinforced 

relationships between current members and aspirant nations.

Figure 9: Security-Related Accession Criteria for the EU and NATO

Sources: EU and NATO.
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There are important differences between the two initiatives. U.S. and 

European analysts pointed out that EU accession processes are lengthy 

and detailed because potential members must be able to implement the 

body of EU laws and regulations known as the acquis communautaire.

20 

By contrast, NATO does not have fixed accession criteria. Since NATO’s 

inception, the decision to admit new members has been based on 

unanimous agreement of all members. Although NATO developed a set of 

guidelines for potential members in 1995 that encompasses alliance 

expectations in political, economic, and military matters, nevertheless, 

these criteria are less specific than those for the EU.

NATO and the EU Use 

Accession Programs to 

Prepare Aspirants for 

Membership

Both NATO and the EU use accession programs to prepare candidate 

nations for potential membership in their organizations. NATO uses the 

Partnership for Peace (PfP) initiative to help expand political and military 

cooperation throughout Europe, and the Membership Action Plan, 

launched in 1999, to help nations aspiring to NATO membership prepare to 

meet NATO goals and priorities. The EU has used a more centralized set of 

assistance programs that help aspirant nations reform their domestic 

institutions to meet EU accession requirements.

Contributions of NATO Members 

to Partnership for Peace Reflect 

National Interests and Priorities

In 1994, NATO established the PfP initiative to increase defense 

cooperation with nonmember European countries, particularly former 

Warsaw Pact members and other former Communist countries in Central 

and Eastern Europe. U.S. and European defense officials said that PfP has 

been NATO’s principal outreach initiative in the post-Cold War period. The 

initiative plays a key role in developing the military capabilities of 

participating partner states, increasing interoperability among NATO allies 

and partners, and reforming their defense establishments. PfP activities 

reinforce bilateral relationships between certain NATO members and 

aspirant nations.

20Adopting the acquis requires candidate countries to implement more than 80,000 pages of 

EU regulations covering 31 categories or chapters. These chapters cover a range of issues, 

including the movement of people, capital, and goods within the EU; competition policy; the 

environment; and consumer protection. Some requirements can be satisfied by simple 

technical changes, while others require large investments. See NATO: Implications of 

European Integration for Allies’ Defense Spending (GAO/NSIAD-99-185, June 30, 1999).
Chapter 2

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Contributions to European Security in New 

Directions

Page 48 GAO-02-174 European Security

As part of the PfP program, NATO members conduct activities, such as 

exercises or training, with aspirant nations’ militaries to improve the 

capabilities of partner militaries and pursue common objectives such as 

interoperability. However, since NATO members decide how to target their 

PfP activities, their activities tend to reflect their national interests and 

regional priorities. As the program’s largest donor, the United States has 

broadly engaged the aspirant nations through a combination of exercises, 

training, and nonlethal equipment transfer.21 By contrast, European NATO 

countries have largely focused their more limited programs on specific 

nations or regions, especially those geographically close to them. 

In addition to PfP activities, some countries run parallel or overlapping 

military outreach programs and activities with former Warsaw Pact 

nations. These programs and activities are part of a country’s broader 

foreign and defense policies. For example, the United Kingdom conducts 

the majority of its military outreach programs, including PfP, under a 

component of its national security strategy known as “Defense 

Diplomacy.”22 Turkey has been very active in outreach activities targeting 

Central Asia and the Black Sea region. In addition to providing full funding 

for a PfP training center in Ankara, which trains military personnel 

principally from former Soviet republics in the Caucasus and Central Asia, 

Turkey has also taken part in organizing two multilateral security 

organizations that function independently of NATO. The Southeast 

European Brigade assembles militaries from throughout the Balkans and 

Black Sea region to train for peacekeeping operations, while the Black Sea 

Naval Cooperation Task Group brings together Turkish, Russian, Bulgarian, 

Romanian, Georgian, and Ukrainian naval assets for search and rescue 

operations, humanitarian assistance, and other tasks as agreed to by all 

parties. 

21See NATO: U.S. Assistance to the Partnership for Peace (GAO-01-734, July 20, 2001).

22The United Kingdom created the “Defense Diplomacy” mission to give greater priority and 

attention to conflict prevention and peacetime diplomacy activities. With regard to military 

outreach, it covers a variety of training and technical assistance programs in defense 

management, arms control and nonproliferation, demobilization and re-education of former 

Soviet troops, and English language training.
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EU Fosters Economic and 

Political Stability in Central and 

Eastern Europe Through 

Enlargement and Financial 

Assistance for Reform

The EU is making pre- and post-accession investments to strengthen 

democratic and economic sectors in Central and Eastern European 

countries seeking EU membership. U.S. and European diplomatic officials 

stated that enlargement represents the European Union’s most significant 

contribution to regional security. The enlargement process stabilizes 

Central and Eastern Europe by integrating former Warsaw Pact nations 

into Western Europe’s political and economic community and by 

facilitating their adoption of democratic, free-market principles. The 

membership process requires candidates to satisfy an extensive set of 

criteria requiring various reforms to restructure financial institutions, 

support democratic governance, and strengthen law enforcement 

institutions in return for EU financial and technical assistance—and 

eventual EU membership.

From 2000 through 2006, the EU estimates that the total cost for 

enlargement-related programs could be about $60 billion, roughly $20 

billion during the pre-accession period and up to $40 billion once 

candidates join the EU. The European Union’s primary pre-accession aid 

program helps accession candidates to adapt domestic policy to EU 

standards while training a range of civil servants and regulatory officials, 

including judges, environmental inspectors, customs officers, border 

guards, and financial analysts. The European Union’s second-largest preaccession program focuses on improving environmental and transportation 

infrastructure. A third program devotes funding to agriculture and rural 

development.

European officials said that EU-supported reforms are having positive 

economic effects in Central and Eastern Europe and have facilitated that 

region’s convergence with Western European markets. CEE exports to the 

EU grew by more than 40 percent from 1994 through 1999, and now the EU 

accounts for nearly two-thirds of CEE exports and imports. In addition to 

increased trade flows, the EU enlargement process also correlates with a 

sharp growth in foreign direct investment to Central and Eastern Europe, 

as shown in figure 10. International Monetary Fund and U.N. analyses 

attribute these in-flows, which spur growth of local private enterprises, to 

the favorable business climate created by EU-supported political and 

economic reforms.
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Figure 10: Foreign Direct Investment to Selected Central and Eastern European 

Countries, 1990-1999

Source: OECD.
Page 51 GAO-02-174 European Security

Chapter 3

Complex Balkans Security Environment 

Addressed With a Range of Military 

Interventions and Nonmilitary Assistance Chapte3r

Since 1992, the international community has used a combination of military 

and nonmilitary interventions to promote peace and stability in the 

Balkans. The United States has made key military contributions through its 

air combat capabilities and ground troops, whereas the European allies 

have contributed the largest contingent of ground troops and specialized 

support units to peacekeeping operations. In Kosovo, the United States 

provided 70 percent of the aircraft and flew more than 60 percent of the 

total sorties, which were essential to the defeat of the Yugoslav army. 

Meanwhile, European allies have consistently provided the majority of 

ground troops to support NATO operations and paramilitary specialists 

who are trained for post-conflict crisis interventions. European allies have 

also led efforts to support nonmilitary interventions, such as development 

assistance and personnel to support multilateral operations. Of the almost 

$15 billion, disbursed to the Balkans region from 1993 through 1999, the 

European Commission (EC) and European allies contributed about $10.2 

billion, primarily to fund humanitarian and reconstruction programs such 

as rebuilding airports, bridges, and roads. During this same period, the U.S. 

distributed about $1.2 billion, primarily for emergency relief and institution 

building. European allies have consistently provided a large number of 

civilians to support multilateral institution-building programs in the 

Balkans, including more than 2,000 U.N. civilian police. 

Military Interventions 

Included a 

Combination of Air 

Combat and Ground 

Troops That Resulted 

in Shared Benefits

The United States’ most significant military contributions to regional 

security have been its tactical air combat capabilities and provision of 

ground troops. The European allies’ key contributions have been their 

provision of the preponderance of ground troops and specialty units 

necessary to support peacekeeping operations, as well as their provision of 

military airbases and commercial airports to support the NATO air 

campaign. Although the United States and European allies have supported 

Balkans operations in different ways, U.S. and European military officials 

asserted that joint military operations are critical to future NATO 

operations, and that the benefits of such operations far outweigh the 

drawbacks.
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United States Played a 

Dominant Role in the 

Balkans Air Campaigns 

One of the most significant U.S. military contributions to regional security 

has been its tactical air combat capabilities in the Bosnia and Kosovo 

conflicts. In Operation Allied Force, for example, the United States 

contributed 70 percent of the more than 1,000 manned and unmanned 

aircraft used, and flew more than 60 percent of the 37,000 strike and 

support sorties from March through June 1999.1

 U.S. capabilities dominated 

in specific types of strike sorties flown. For instance, the United States 

flew 87 percent of the sorties to disrupt or destroy Yugoslav air defenses. 

The United States also flew more than 70 percent of close air support 

missions, which provided protection for friendly forces on the ground. 

Furthermore, the United States led critical support sorties by providing 

intelligence and reconnaissance, intra-theater airlift, air refueling, and 

special operations. U.S. and European military officials stated that 

Operation Allied Force further highlighted the gaps in capabilities between 

the United States and its European allies, particularly in avionics, precision 

munitions, and tactical communications. These gaps limited the European 

countries’ ability to conduct critical suppression of enemy air defense, as 

well as command-and-control missions. Appendix I shows the types of 

aircraft and capabilities provided by selected countries. 

U.S. military officials stated, however, that the successful implementation 

of the U.S. air campaigns, particularly Operation Allied Force, was 

attributable in large part to military airbases and commercial airports 

provided by European NATO countries to support the air operations. They 

noted that in Operation Allied Force, U.S. forces depended heavily on 

Europe’s provision of 22 land bases located in 8 countries, and particularly 

those in Italy and Turkey, to launch their sorties successfully (see figure 

11). Officials also noted that the European bases provided critical 

logistical support, including air traffic control, to support the NATO 

campaigns. 

1

DOD and NATO define a “strike” sortie as an attack intended to inflict damage on, seize, or 

destroy an objective. “Support sorties” consist of both combat and noncombat missions. 

They include intelligence and reconnaissance, combat air patrols to protect strike missions, 

combat search and rescue, and aerial refueling. NATO categorizes combat sorties as 

battlefield air interdiction, combat air patrol, close air support, and suppression of enemy 

air defenses.
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Figure 11: European Bases Available to Operation Allied Force

Source: DOD. 
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Europeans Contribute 

Majority of Ground Troops 

and Provide Unique Peace 

Support Capabilities

European allies have made military contributions to security and stability 

in the Balkans by providing ground troops and specialty units trained in 

addressing post-conflict situations. As shown in figure 12, European allies 

collectively provided the largest number of ground troops to support U.N. 

peacekeeping operations in the Balkans from 1992 to 1995, and they 

provided the preponderance of ground troops to support NATO operations 

that began in December 1995.

Figure 12: Troops Supporting Peacekeeping Operations in the Balkans, 1992-2000

Note 1: The Czech Republic, Hungary, and Poland are included as “other” for 1992-1998, and as 

“European allies” for 1999 and 2000. 

Note 2: Troop numbers reflect snapshots at various times during the stated year.

Sources: U.N. and NATO.
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Although the United States provided the largest single national contingency 

to NATO operations (for Bosnia since 1996, and for Kosovo since 1999), 

European allies have provided between 56 and 70 percent of NATO ground 

troops to the region since 1996. As of March 2001, European countries 

provided more than 60 percent of the 20,000 troops in Bosnia and 37,000 

troops in Kosovo, with the United States providing about 20 and 15 percent, 

respectively.2

 Other countries, such as Russia and the United Arab 

Emirates, provided the remaining ground troops. In addition to ground 

troops, U.S. and European military officials cited the European countries’ 

provision of specially trained personnel to serve in peace support 

operations as another significant contribution to regional security in the 

Balkans. These officials noted that Scandinavian countries contributed 

experts specially trained in controlling civilian affairs and responding to 

emergency crisis situations, particularly in war-torn areas that lack 

adequate health and public works services. Many European countries also 

provide uniquely trained constabulary forces, such as Italy’s Carabinieri, to 

assist in post-conflict efforts to restore law and order. Several U.S. and 

European military officials considered these special constabulary forces to 

be the most critical link to restoring public order and maintaining stability 

in the Balkans. Constabulary forces perform a role between that of 

military ground troops and that of civilian police. They are trained to 

address counterterrorism issues, gather and analyze criminal intelligence, 

control riots, and provide military force protection. 

NATO has used constabulary forces to help maintain stability in Bosnia and 

Kosovo. Italy’s Carabinieri represent the preponderance of NATO’s 

constabulary forces in the Balkans. For example, Italy provides about 75 

percent of the almost 500 special constabulary forces used in Bosnia and 

more than 80 percent of the 320 used in Kosovo. Although NATO’s force 

goals for Kosovo have been met, as of April 2001, only 11 of the 19 platoons 

had been staffed in Bosnia. According to U.S. and European military 

officials, the shortfall of constabulary forces in Bosnia reflects the limited 

availability of such forces. Approximately 22 nations currently have 

special constabulary force capabilities that can be used in these operations 

and, according to U.S. and European officials, most have resource, funding, 

2

The U.S. military has instituted and follows the most stringent force protection measures 

among NATO allies, according to U.S. and European military officials. These measures have 

a significant effect on the number of troops needed for U.S. operations. In contrast, 

European nations generally devote a smaller percentage of their combat forces to force 

protection, which allows them to conduct operations with fewer troops on the ground.
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and training constraints. The United States does not possess these 

uniquely trained personnel.

Shared Operations Offer 

Benefits, but Pose 

Challenges 

According to U.S. and European military and NATO officials, multinational 

operations have become more frequent during the post-Cold War era and 

have provided political and operational benefits that outweigh the 

drawbacks of such deployments. They also emphasized that effective crisis 

management depends upon joint U.S. and European participation in the full 

range of peace support operations and post-conflict reconstruction efforts. 

While U.S. and European contributions to security in the Balkans region 

reflect different military capabilities and approaches to conflict resolution, 

military officials at NATO and in the European countries we visited 

stressed the importance of shared responsibility and risk in current and 

future NATO operations—both on the ground and in the air. These officials 

noted that a joint U.S.-European ground presence is critical to maintaining 

stability in the Balkans, and that European countries need to play a greater 

role in future NATO air operations. 

Senior U.S. and European political and military officials said that 

multinational operations in Bosnia and Kosovo provided political 

advantages of operating as a coalition because members and partner states 

established and reached NATO objectives together rather than unilaterally. 

French military officials said that maintaining consensus was a critical 

factor in Operation Allied Force’s success. Coalitions are cited as 

beneficial also because no single country bears the entire burden, which 

lessens the staffing problems that some countries face when providing 

troops to multiple operations simultaneously. Staffing shortages were 

noted in the areas of medical personnel, linguists, and communications. 

European officials also noted that U.S. involvement provides considerable 

weight and credibility to an operation and greatly adds to NATO’s 

cohesiveness. 

Multinational operations also provide operational benefits that include the 

ability to combine the resources and capabilities of member states. During 

Operation Allied Force, for example, the United States provided significant 

air combat capabilities and equipment, while France provided specialty 

aircraft to assist in night-flight strike missions and search-and-rescue 

missions. Further, the United Kingdom played an important role in Bosnia 

to monitor checkpoints and cease-fire lines, and to lead nation-building 

activities involving joint civilian and military units. U.S. and European 

military officials also said that multinational operations improve 
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interoperability and relationships among allies, particularly with the new 

NATO members—the Czech Republic, Hungary, Poland—and Partnership 

for Peace (PfP) countries. Military officials said that working together 

allows countries to train with and learn from other NATO members, which 

may have expertise in specific tasks. Training and the transfer of skills 

have helped the new allies adapt to NATO operations and have fostered 

relationships among partner countries and longstanding NATO members. 

U.S. and European officials said that enhanced interoperability, in addition 

to the pooling of assets and expertise, creates forces that are more flexible 

and thus better prepared for the diverse challenges of peace support 

operations. 

Despite these benefits, U.S. and European military officials said that the 

deployment of multinational forces into intense conflicts such as Bosnia 

and Kosovo has faced challenges and drawbacks. These officials noted 

that as result of the Balkans campaign, interoperability problems and gaps 

in capabilities among member states were identified. For example, systems 

and equipment provided by member statesespecially those used in 

command-and-control, communications, and targeting systems—were 

often different and incompatible. Another challenge was the imbalance in 

the warfighting equipment possessed by member states. Few NATO allies 

had the capacity to provide more sophisticated equipment, such as 

precision-guided munitions, in sufficient numbers or at all. Even France, 

one of the leading European contributors of precision munitions during 

Operation Allied Force, depleted its supply and spent about $100 million to 

purchase additional ones from the United States. European officials also 

noted political drawbacks to multinational operations: for instance, some 

coalition members had different policies and strategies. This issue was 

highlighted in decisions about using force or ground troops in Kosovo, 

where the United States was reluctant to commit ground troops. 

U.S. and European 

Nonmilitary 

Intervention Includes 

Combination of 

Development 

Assistance and 

Nonmilitary Personnel 

European countries and the United States led donor community efforts to 

restore stability and security to the Balkans by providing development 

assistance and the nonmilitary personnel needed to support multilateral 

operations. Of the almost $15 billion in development assistance disbursed 

to the Balkans between 1993 and 1999, the European Commission and 

European allies contributed about $10.2 billion primarily for humanitarian 

and economic reconstruction programs. The United States provided about 

$1.2 billion for humanitarian, economic, and democracy-building programs. 

The EC and European allies have led the donor community in pledging 

more than 80 percent of the $2.3 billion identified by the Stability Pact for 
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Southeastern Europe program, and in supporting a new initiative allocating 

about $690 million in emergency winterization assistance to Serbia in 2000 

and 2001. European officials identified the absorption of more than 1 

million Balkans refugees into their countries as another significant 

contribution to stabilizing the region. European allies provided a large 

percentage of nonmilitary personnel to support multilateral organizations 

that promote social reconstruction and institution-building in the region. 

Europeans Use 

Development Assistance to 

Foster Stability in the 

Balkans 

European officials view the restoration of stability and security to the 

Balkans as a major priority and have used development assistance as a 

primary tool to foster change. Of the $15 billion in development assistance 

disbursed in the Balkans from 1993 to 1999, the European allies 

contributed about $6.9 billion, with top donors Germany, the Netherlands, 

and Austria accounting for more than 40 percent of the disbursements. As 

shown in figure 13, the European Commission was the single largest donor 

and disbursed more than $3.3 billion during this period. 
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Figure 13: Development Assistance Totaling $15 Billion Disbursed to the Balkans, 

1993-1999 

Note: B = billions.

Source: GAO analysis based on OECD data. 

According to EU officials, the priorities of the EC and many European 

development assistance programs during the 1990s have centered largely 

on stabilizing the region and integrating the countries of the former 

Yugoslavia into the European Union. To stabilize the region, the EC and the 

European allies focused resources on humanitarian assistance and 

economic reconstruction programs. Humanitarian assistance activities (1) 

provided emergency relief such as food and medicine to victims of war-torn 

areas, (2) reduced the suffering of refugees, displaced persons, and 

refugees returning to their homelands, and (3) carried out short-term 

rehabilitation and reconstruction work, such as repairing and equipping 

schools and hospitals. Reconstruction programs included the rebuilding 

of major physical assets in the Balkans such as airports, bridges, railways, 

and roads. 
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Many EU member countries have designed their assistance programs to 

foster economic and social reform and help bring the Balkans countries 

closer to European standards, with potential integration into the European 

Union as the ultimate incentive. The Stabilization and Association Process, 

established by the European Union in 1999, provides each Balkans country 

with a “list” of conditions and reforms designed specifically to enable that 

country to better meet EU accession criteria. Once the country meets the 

established conditions—such as political and economic reforms, and 

measures to strengthen democracy, human rights, and the rule of law—a 

Stabilization and Association Agreement is signed. As of November 2001, 

only the Former Yugoslav Republic of Macedonia and Croatia met the 

conditions. Each received an association agreement in April and May 2001, 

respectively.

U.S. Funding Focuses on 

Emergency Assistance and 

Institution-Building 

Programs

As the Balkans’ second-largest bilateral donor, the United States has spent 

about $1.2 billion for development assistance activities from 1993 to 1999 

(see figure 13). The primary goals of U.S. assistance programs in the 

Balkans are (1) to restore peace and reduce ethnic tensions, and (2) to 

promote democracy, economic prosperity, and security within the region. 

Accordingly, the U.S. assistance programs have centered largely on 

emergency assistance, economic restructuring, and institution-building 

programs. Emergency assistance has included food aid, medical supplies, 

and refugee relief efforts, particularly to Bosnia and Kosovo. The Support 

for East European Democracy Act has focused on economic restructuring 

and on the development of democratic institutions in the Balkans. Key 

economic restructuring efforts include the development of a functioning 

market economy through privatization, macroeconomic reforms, and the 

introduction of sound fiscal policies. The United States has promoted 

democratic institutions and multiethnic societies through independent 

media, free and fair elections, improved governance, and an independent 

judiciary. As of September 1999, more than half of U.S. assistance 

obligated to the Balkans has gone to Bosnia-Herzegovina, and it includes 

more than $500 million for reconstruction and infrastructure-building 

programs.
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Stability Pact for 

Southeastern Europe 

Provides Promise, but 

Problems Limit 

Disbursements 

The Stability Pact for Southeastern Europe,3 initiated by the European 

Union on June 10, 1999, is the primary regional framework to coordinate 

the development assistance needs of the countries of southeastern Europe 

and to accelerate the integration of a stable, reformed region into the EuroAtlantic community. In March 2000, international donors, including 

multilateral institutions such as the European Investment Bank and the 

World Bank, pledged more than $2.3 billion to fund Stability Pact projects 

designed to develop infrastructure, promote private sector development, 

support policy and institutional reforms, and encourage democratization, 

reconciliation, and security. Of the $2.3 billion pledged, $1.7 billion was 

allocated for “Quick Start” projects that were to be completed within one 

year. As of December 31, 2000, the donor community had disbursed about 

$300 million through the Stability Pact program. The EC and European 

allies collectively accounted for about 75 percent of the disbursed funds. 

The Special Coordinator of the Stability Pact attributed the low 

disbursement rate at the 9-month mark to delays caused by both donors 

and recipients. The Special Coordinator noted that donors and investment 

banks often have bureaucratic procedures. Also, recipient countries often 

cannot absorb the considerable sums offered, and they do not have the 

legal framework or the administrative structures necessary to facilitate the 

implementation of projects. U.S. and European development assistance 

officials noted that the implementation of complex infrastructure projects 

takes significantly more time than other types of programs and depends on 

the recipient country’s capacities.

3

The Stability Pact’s major participants include Albania, Bosnia, Bulgaria, Croatia, Hungary, 

Romania, Russia, Slovenia, the Former Yugoslav Republic of Macedonia, Turkey, the United 

States, Canada, Japan, and the European Union and other multilateral organizations and 

lending institutions, including NATO, the United Nations, the Organization for Security and 

Cooperation in Europe, the International Monetary Fund, and the World Bank.
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Development officials also noted that other issues have hampered the 

progress of the Stability Pact program, including the lack of a strategy, the 

lack of prioritization of projects, and the recipients’ unrealistic 

expectations. The original goal was to address a range of the most pressing 

problems of southeastern Europe, from security to post-conflict and 

reconstruction issues. The Quick Start Package was created as a “shotgun 

approach” to demonstrate donor support quickly. Other than categorizing 

projects into the three priority areas, however, the Stability Pact did not 

prioritize the needs of the countries or the 244 projects to be implemented. 

The May 2001 Coordinator’s Report identified the need to develop a 

strategy, prioritize and focus on key areas, establish and deliver concrete 

and measurable results, and improve delays in project implementation.4

EC Leads Donor 

Community Efforts to 

Disburse Emergency 

Assistance to the Federal 

Republic of Yugoslavia

In fall 2000, the international donor community began providing assistance 

to the Federal Republic of Yugoslavia in direct response to and in support 

of Serbia’s transition to democracy on October 5, 2000. By November, the 

EC had approved a $184 million emergency winter assistance package, of 

which about $90 million was disbursed by March 2001. The donor 

community met in December and pledged about $690 million to support 

winterization and other urgent program needs in the Federal Republic of 

Yugoslavia, particularly Serbia, that included fuel, electricity, food, and 

medical assistance. The United States was the single largest bilateral 

donor, pledging more than $87 million to Serbia and more than $70 million 

to neighboring Montenegro. The U.S. had disbursed about $36 million as of 

January 2001. While much of the emergency assistance commitments to 

Serbia still needs to be disbursed, the assistance provided to date has 

demonstrated the donor community’s support and commitment to the new 

democratic government of Serbia.

In further support of the economic recovery and transition needs of the 

Federal Republic of Yugoslavia, the EC and World Bank sponsored a 

donor’s conference in June 2001. The donor community, composed of 

bilateral and multilateral organizations, international financial institutions, 

and the Soros Foundation, pledged about $1.3 billion to restore 

macroeconomic stability, promote economic growth, improve social wellbeing, and build human capacity, including health and education. Although 

the pledges are still being finalized, EC and European allies have pledged 

4

Report of the Special Coordinator on the Implementation of the Quick Start Package, May 

2001.
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42 percent of the $1.3 billion, and the United States has pledged about 14 

percent. Other countries, multilateral organizations, and the Soros 

Foundation pledged the remainder. 

Absorption of Refugees 

Viewed as Significant 

European Contribution 

European officials noted that absorbing Balkans refugees into their 

respective homelands and providing them with food, shelter, and living 

allowances for up to 1 year are significant contributions to European 

security. By the end of 1996, more than 70 percent of the 770,000 displaced 

persons or refugees from the Balkans had migrated to six European 

countries, according to U.N. High Commissioner for Refugees (UNHCR) 

statistics (see figure 14). 

Figure 14: Balkans Refugee Migration to Europe and the United States, 1996

Sources: U.N. High Commissioner for Refugees and U.S. Department of State. 
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About 330,000 refugees from Bosnia-Herzegovina had emigrated to 

Germany by 1996, placing enormous burdens on Germany’s social 

infrastructure. The May 2001 Stability Pact Special Coordinator’s report 

notes that while many refugees from Bosnia and Croatia had returned 

home, more than 1.3 million persons from the Balkans region remain 

categorized as refugees or internally displaced persons and need some type 

of assistance. 

European Allies Provide 

Majority of Nonmilitary 

Personnel to Multilateral 

Organizations in Region

The contribution of nonmilitary personnel to assist multilateral 

organizations is considered another critical contribution to regional 

security. Collectively, European allies provided more nonmilitary 

personnel to multilateral organizations that promote peacekeeping, 

conflict prevention, and post-conflict rehabilitation in the Balkans than did 

the United States. For example, as of April 2001, European allies provided 

about one-third of U.N. civilian police and almost 60 percent of the 

specialists to the Organization for Security and Cooperation in Europe. 

European allies also provided 139 persons to support the EU Monitoring 

Mission in the Balkans. The United States, however, was the single largest 

contributor of civilian police and personnel to support OSCE programs in 

the region, providing 12 percent of civilian police and 16 percent of 

personnel. 

To support a critical element of peacekeeping operations and post-conflict 

interventions in the Balkans region, the United Nations has relied on 

civilian police provided by its member countries. Civilian police play a 

critical role in post-conflict interventions by helping war-torn societies 

restore the conditions necessary for social, economic, and political 

stability. The traditional role for U.N. civilian police through the mid-1990s 

was to advise, train, and monitor local police. In Kosovo, however, the 

United Nations refocused its role to restore and maintain law and order, 

and to help establish judicial reforms and rule of law.

As of January 2001, the international community provided more than 6,300 

civilian police to support U.N. missions in Bosnia-Herzegovina and Kosovo. 

European allies provided more than 2,000 civilian police, while the United 

States provided about 764 civilian police. Other member countries, such as 

India, Jordan, and Pakistan, provided the remaining civilian police. See 

figures 15 and 16 for the contributions made by the European allies, the 

United States, and other donors to peacekeeping operations in Bosnia and 

Kosovo. 
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Figure 15: Donor Contributions of Civilian Police to Bosnia 

Source: U.N. 
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Figure 16: Donor Contributions of Civilian Police to Kosovo 

Source: U.N.

Civilian police represent the largest contribution of international civilian 

personnel to U.N. peacekeeping operations in the Balkans. However, the 

program has had difficulties in recruiting, training, and deploying a 

cohesive and effective civilian police force. A U.N. Secretary General’s 

report identified various reasons for the staffing problems, including the 

absence of a standing police force at the U.N. that is designed for 

international field operations.5

 Further, individual countries have a limited 

supply of domestic police, limited training or experience in international 

policing, widely varying police doctrine and practices, and 6- to 12-month 

staff rotations. The report also noted that the process used to identify, 

5

The U.N. Secretary General appointed a panel to address U.N. peace operations and 

security activities. The panel’s report, dated August 21, 2000, identified areas needing 

improvement and made recommendations.
Chapter 3

Complex Balkans Security Environment 

Addressed With a Range of Military 

Interventions and Nonmilitary Assistance

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select, and deploy civilian police was time-consuming and prevented the 

U.N. from deploying a civilian police component rapidly and effectively. 

To address conflict prevention and post-conflict rehabilitation in the 

Balkans, the European allies provided the majority of personnel to support 

the Organization for Security and Cooperation in Europe’s 

democratization, security-building, and political affairs programs. Of 

approximately 840 persons provided to OSCE missions in the Balkans in 

April 2001, the European allies provided about 500 persons. The United 

States, as the single-largest contributor, provided 141 persons. In addition, 

European allies provided 139 persons to support EU Monitoring Mission 

efforts to monitor and assess local security conditions. As shown in figure 

17, the primary use of European and U.S. personnel in spring 2001 was in 

democratization and security-building programs. 

Figure 17: Personnel Provided to OSCE and EU Monitoring Mission 

Sources: U.S. Missions to the OSCE and EU.
Page 68 GAO-02-174 European Security

Chapter 4

European Militaries Addressing Shortfalls, but 

Competing Budget Priorities Are Slowing 

Implementation Chapte4r

Operational problems experienced in the Balkans peacekeeping operations 

in the 1990s highlighted numerous shortfalls in the military capabilities of 

the European allies. On the national level, they are addressing some of 

these shortfalls by restructuring their military forces, moving to allvolunteer forces, and modernizing military systems and equipment, but 

progress has varied according to each country’s ability to make defense 

spending a priority.1

 On a multinational level, NATO and the European 

Union have recognized the need to improve defense capabilities and have 

launched initiatives that establish goals for addressing country shortfalls. 

NATO’s Defense Capabilities Initiative (DCI) was designed to highlight the 

need for qualitative improvements in five areas of military capability. The 

European Union’s European Security and Defense Policy (ESDP) is a 

broader political and security strategy to prepare EU member nations to 

conduct crisis management and contingency operations when NATO is not 

engaged. DCI and ESDP both recognize that the European allies need to 

acquire certain systems and equipment that will help them perform a range 

of military operations more effectively, particularly with combat forces. 

However, at a time when the European allies are taking on increased 

responsibilities for regional security, they are hampered by relatively flat 

defense budgets because of decisions about competing domestic and other 

national priorities. This likely will delay their ability to meet the goals and 

objectives of their defense initiatives until at least the end of this decade. It 

is too early to discern what effect, if any, the terrorist attacks of September 

11, 2001, will have on future European defense priorities and spending. 

1

The defense capabilities of U.S. military forces in Europe are also important to security and 

stability in the region. We have issued several reports that address the capabilities of U.S. 

forces in Europe and their ability to respond to a range of operations since the end of the 

Cold War. We do not address these issues in this report.
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Allies Restructure and 

Modernize Defense 

Capabilities

The European allies’ participation in the Balkans operations in the mid- to 

late 1990s was constrained by the large and inflexible structure of their 

military forces and by a lack of key military assets, such as strategic airlift; 

command, control, communications, and intelligence systems; and systems 

for precision attack. Appendix I illustrates the capabilities provided by 

selected countries during Operation Allied Force. To address these 

shortfalls, most allies we visited conducted defense reviews or 

assessments in the late 1990s, with each country assessing its national 

needs. They have since begun to restructure their military forces, including 

reducing force numbers, creating more rapidly deployable units, and 

centralizing operational commands and support organizations. They are 

also moving toward all-volunteer forces, modernizing their military 

equipment, and implementing improved logistics and asset management.2

 

Improvements in these three areas will give the allies greater flexibility and 

capability to respond to a range of threats within and outside of Europe. 

Overall, most European allies we visited have made the greatest progress in 

restructuring their forces. Efforts to move toward an all-volunteer force 

and modernize equipment have proceeded more slowly because of the cost 

of the initiatives. As a result, some programs have been scaled back, or 

dates for achieving goals have been delayed. 

Allies Make Greatest Strides 

in Force Restructuring

The European allies we visited have made the greatest progress in force 

restructuring; that is, changing the size and structure of their forces. In the 

post-Cold War period, the European allies’ large and cumbersome armies, 

still structured as heavily armored forces designed to resist a border attack 

by Soviet armored forces, hindered rapid deployment to the Balkans 

peacekeeping operations. Germany, Italy, and other European allies lacked 

smaller, all-volunteer forces that could be easily deployed, sustained, and 

integrated into multinational forces. Even British and French military 

forces, which have historically been more oriented toward expeditionary 

missions than have those of many other European nations, recognized that 

they were unable to meet some of the deployment demands of post-Cold 

War military operations. These demands included operating beyond 

NATO’s borders and in areas with little or no supporting infrastructure. 

2

We define logistics and asset management as the process by which European allies make 

their militaries more efficient and cost-effective through base reductions, closures, and 

consolidations; privatization initiatives; and the creation of separate agencies and initiatives 

to ensure efficiency within the armed forces.
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Since the Balkans operations, the European allies we visited, with the 

exception of Turkey, have improved defense capabilities by developing 

smaller but more efficient forces, creating rapid reaction units, and moving 

toward centralized operational commands and support organizations. 

Allies Reduce Force Numbers 

and Size of Units

Most European allies have reduced their force numbers and have 

restructured their militaries into smaller, more flexible units that can more 

effectively respond to post-Cold War contingencies. Between 1990 and 

2001, the number of military forces in France, Germany, Italy, and the 

United Kingdom fell between 31 and 36 percent, as indicated in table 1. 

Countries such as Norway and Germany plan to reduce their force numbers 

even further between 2001 and 2006, with average cuts ranging from about 

16 percent to 50 percent.3

 Force reductions have been necessary because 

of the high cost of maintaining personnel, especially with NATO allies 

facing static defense budgets. According to NATO officials, high personnel 

costs in Europe have left little money for research and development and for 

the acquisition of military equipment. 

Table 1: Changes in Number of Forces, 1990, 1995, and 2000

Source: The Military Balance, International Institute for Strategic Studies, London.

In addition to reducing force numbers, European allies are reorganizing 

their forces, eliminating many large division and armored units, and 

creating smaller, lighter infantry and other units to respond to a range of 

3

Norway plans to reduce its total number of armed forces by about 50 percent between 2002 

and 2005. Germany has indicated that it will reduce its force size by about 16 percent 

between 2001 and 2006.

Country

Number of

Forces

(1990-1991)

Number of

Forces

(1995-1996)

Number of

Forces

(2000-2001)

Percentage

Reduction

(1990-2001)

France 461,250 409,000 294,430 36

Germany 469,000a

a The number of forces was significantly larger in 1989, when East and West Germany had separate 

armies. At that time the combined number of forces was 521,000. 

339,900 321,000 32

Italy 389,600 328,700 250,600 36

United 

Kingdom

306,000 236,900 212,450 31
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threats within and beyond NATO borders, such as in the Balkans. Force 

restructuring has been more difficult for some countries and has taken 

longer. German embassy officials stated that force restructuring has been 

slower than originally anticipated because financial resources have been 

devoted to drawing down significant numbers of personnel that were part 

of its large Cold War army, in addition to dissolving the structures and 

reincorporating the former East German forces. Also, German forces had 

to assume control over and in many cases destroy the equipment and 

weapons systems of the former East Germany, and to assist in moving 

Russian troops out of the country. Unlike other NATO allies, Turkey has 

maintained a large, combat-ready force of more than 600,000 personnel 

because of its strategic location and its need to defend its borders against 

potential threats in the region. According to Turkish defense officials, 

Turkey’s large combat force has not been significantly restructured since 

the end of the Cold War. Officials stated that given the country’s strategic 

location, it is unlikely that the Ministry of Defense will significantly 

restructure its forces in the near future. 

Allies Form Rapid Reaction 

Units to Carry Out Missions 

In an effort to quickly address regional instabilities, the countries we 

visited have focused on developing rapidly deployable units with varying 

levels of readiness, which would on short notice allow them to send units 

to missions within and beyond NATO borders, such as the Balkans. 

According to U.S. defense officials, countries such as France and the 

United Kingdom, which historically had some expeditionary forces, have 

made greater progress in this area. This has enabled the United Kingdom, 

for example, to take the lead in the current operations in the Former 

Yugoslav Republic of Macedonia. The French are implementing plans to 

transform their rapid reaction capacity from the 12,000 ground forces they 

had in the 1980s to 35,000-50,000 ground forces by 2002. According to 

NATO officials, France should be able to deploy 50,000 military personnel 

for alliance missions by 2002. The United Kingdom’s joint rapid reaction 

force will provide force packages up to brigade size, and combat and 

support forces will be provided in two echelons, according to readiness. 

The highest readiness force is based on a light infantry battalion or 

commando group. Although the framework for the rapid reaction 

capabilities has been completed, British officials have indicated that full 

operation of the rapid reaction force, initially scheduled for 2001, will not 

take place until late 2002 or early 2003. This is because many of the people 

who would be involved in making these changes are currently serving in 

the Balkans and in other operations, such as in Sierra Leone. 
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U.S. and European officials have indicated that Italy and Germany have 

only recently developed rapid reaction capabilities and that they would 

need more time to fully staff and to acquire complete capabilities for their 

rapid reaction forces. Italy realized its need for rapid reaction capabilities 

after leading Operation Alba in 1997. 4 In 2001, Italy can deploy and sustain 

a contingent of 8,000 to 10,000 troops, and it is setting up a rapid 

deployment core within the next 2 years. In the future, the Italian Defense 

Ministry expects to deploy at least three times as many troops as it 

currently does. Germany has a crisis reaction force of 65,000 that it can 

deploy within time frames of up to 30 days. Country officials have stated 

that the size of Germany’s rapid reaction force will increase to 150,000 by 

2004, once it has transformed most of its armed forces. 

Allies Shift Toward Cooperation 

Among Military Services

Four of the five European allies we visited have set up centralized national 

commands or headquarters to facilitate deployments to NATO and future 

EU operations. In addition, they have created cooperative organizations 

within their armed forces to manage their resources more effectively and to 

conduct operational deployments more efficiently. Prior to establishing 

these centralized commands, European nations found it difficult to deploy 

forces to contingency operations, such as those in the Balkans, because 

little coordination existed between the various military service branches 

and supporting organizations. 

After experiencing deployment difficulties, Italy established a Joint 

Operations Headquarters in Rome, headed by the Chief of the Defense 

General Staff, to develop operational doctrine and to plan and conduct 

joint operations and exercises, and a “high readiness” headquarters in 

Milan, to meet the demands of deployments in the Balkans. France 

established a Joint Operational Command, with all military operations 

being executed under the Chief of Defense. In addition, France has 

developed a Joint Rapidly Deployable Force Headquarters and a Ground 

Action Force Command to manage the deployment of ground forces, 

including four rapidly deployable force headquarters. The United Kingdom 

established a Permanent Joint Forces Headquarters, a Joint Command 

Systems Initiative to unify operational communications systems, and a 

4

Operation Alba’s mission, led by Italy in the spring and summer of 1997, was to provide a 

secure environment so that emergency humanitarian relief and international assistance 

could be provided to Albania. This paved the way for Albania to begin restoring social 

peace and democracy. Seven thousand military personnel from various countries were 

involved at the height of the operation. 
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Joint Defense Center to handle doctrine. It is also establishing two 

deployable Joint Forces Headquarters. In addition, the United Kingdom 

established a number of joint forces and units, including a Joint Royal 

Navy/Royal Air Force Harrier force and a Joint Helicopter Command. In 

2000, Germany set up a Joint Operations Command that will be operational 

by the end of 2001 and will be key in planning and executing military 

operations, according to German military officials. Germany also 

established a Joint Support Service and a Joint Medical Service to provide 

maintenance, logistics, intelligence, training, and medical support to all 

three branches of the military. 

Allies Move to All-Volunteer 

Forces, but Efforts Are Slow 

and Expensive 

Some European allies have found that the shift from conscript to allvolunteer forces has been more expensive than originally planned. This 

has slowed the European allies’ transition to all-volunteer forces and has 

resulted in less savings to the armed forces than expected. Many European 

allies maintained militaries with large numbers of conscripts and stringent 

conscription policies throughout most of the 1990s. These policies 

constrained European allies’ ability to engage fully in missions such as the 

Balkans peacekeeping operations. Germany’s and Italy’s conscription 

policies, for example, posed legal hurdles to deploying forces outside 

national boundaries. German and American officials noted that German 

army units could not deploy as one unit because they were composed of 

both volunteers and conscripts. To have a unit ready for deployment, 

military officials needed to pull volunteer forces from several units and 

train them for out-of-area operations. This process increased the amount 

of time needed for deployment. 

The European allies we visited are taking different approaches to moving 

toward all-volunteer forces, which they expect will produce better trained, 

highly skilled, and longer-serving troops that are more suited to post-Cold 

War missions. Nearly 70 percent of NATO allies have moved to an allvolunteer force or have begun the process toward that end, as indicated in 

appendix II. France had pledged to end conscription by 2002 but was able 

to complete its efforts to move toward an all-volunteer force in 2001, more 

than 18 months ahead of schedule. Other allies, such as Italy, have faced 

more difficulties in moving to an all-volunteer force. In Italy, a 2000 

parliamentary law sets out the framework for the gradual establishment of 

a professional force. Italy has pledged to end conscription by 2006, but it 

faces challenges in moving to a volunteer force and attracting personnel for 

missions. According to U.S. Department of State officials, Italy’s slowness 

in moving to an all-volunteer force is a result of resistance from the public 
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sector, such as charity organizations, which have relied on conscripts as a 

source of free or inexpensive labor.

Some nations we visited have decided to keep conscription or to reduce the 

amount of time conscripts must serve. Germany, for example, is moving 

toward a larger number of volunteer forces but has elected to keep a 

conscript base. It is reducing the number of conscripts from 135,000 in 

2001 to 80,000 by 2006, and it has made efforts to reduce mandatory 

military service from 10 months to 9 months after 2002. According to 

German officials, conscription will remain because of the importance of 

national service in Germany’s defense culture and because it acts as a 

safety measure in the event that a national crisis demands increased 

capabilities. Country officials stated that Turkey has retained a largely 

conscripted armed force because of the country’s location, vast territory, 

and external threats. With 93 percent of its army composed of conscripts, 

Turkey has the largest percentage of conscripts among all the allies. 

While acknowledging that an all-volunteer force will be more cost effective 

in the long run, European allies such as France, Germany, and Italy have 

found that the shift from a conscript to an all-volunteer force has been 

more expensive than originally planned and has resulted in less savings to 

the armed forces than expected. However, no cost data are yet available. 

Allies Have Made Some 

Progress in Equipment 

Modernization

To remedy some of the operational shortfalls identified in post-Cold War 

operations, European allies have embarked on equipment modernization 

programs to improve their capabilities in the areas of air- and sealift; 

command, control, and communications; intelligence, surveillance, and 

reconnaissance; suppression of enemy air defenses; air-to-air refueling; and 

precision-guided munitions. As is the case with the previously discussed 

reform efforts, some allies have accomplished more than others because of 

the condition of their military forces at the end of the Cold War and 

because of the level of their defense budgets. Nevertheless, all five 

countries we examined in this report have had to stretch out, postpone, or 

cancel some modernization programs because of funding shortfalls. 

Generally, the United Kingdom and France have made the most progress in 

equipment modernization. Italy has made some progress, and Turkey’s 

recent financial difficulties have slowed its equipment modernization 

efforts. The United Kingdom and France initiated their defense reviews 

earlier than did Germany and Italy. They then proceeded to make the 

changes necessary to improve their defense capabilities. France initially 
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focused its efforts on eliminating conscription, while the United Kingdom, 

with an all-volunteer force, was able to devote more of its resources to 

equipment modernization. Germany’s progress has been slower because of 

its inability to concurrently fund many projects. Of the 28 priority 

equipment projects identified by German military officials, 17 currently 

receive funding. Six of the remaining 11 projects are not due to receive 

funding until 2006 or later. Turkey is experiencing particular challenges in 

funding defense modernization efforts because of its current economic 

condition. Turkey has 60 procurement programs in its current portfolio, 

but 32 acquisition projects have been postponed as part of an effort to 

relieve pressure on the country’s economy. In addition to postponing 

projects, some have also been cut back. Appendix III identifies key 

equipment programs in France, Germany, Italy, Turkey, and the United 

Kingdom.

Some of the European allies we visited have implemented logistics and 

asset management programs that they believe will save them money over 

the long term and allow them to use the savings to modernize equipment. 

Some of these allies have focused on making their military support 

establishments more efficient and cost effective through base reductions, 

closures and consolidations, and privatization initiatives. Both Germany 

and the United Kingdom, for example, are implementing initiatives that 

they believe will result in savings and produce efficiencies for their 

Ministries of Defense. According to country officials, however, these 

countries have not been able to save as much as they originally intended 

because of the difficulty and expense in closing and consolidating bases, 

along with other factors. 

NATO and EU 

Initiatives Provide New 

Frameworks for 

Improving Defense 

Capabilities

The European allies’ performance in Operation Allied Force was an 

important factor in launching two recent NATO and EU initiatives that are 

providing additional focus and incentive for European nations to improve 

their defense capabilities. NATO’s Defense Capabilities Initiative and the 

EU’s European Security and Defense Policy are different concepts that 

share the objective of strengthening the capacity of European countries to 

act militarily. Countries have pledged to improve their capabilities for 

crisis management, including the availability, deployability, sustainability, 

and interoperability of their forces. European countries have made 

progress in various areas and are increasingly taking the lead in 

contingency operations such as those in the Former Yugoslav Republic of 

Macedonia. However, defense capability shortfalls, created by inadequate 
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funding, may prevent them from conducting larger, more demanding 

operations until at least the end of the decade.

DCI and ESDP: Different 

Concepts, Similar 

Objectives

NATO designed DCI to help the alliance improve its defense capabilities 

and prepare for a broadened set of security obligations, as outlined in 

NATO’s 1999 Strategic Concept. It is a mechanism to highlight and promote 

needed improvements in five areas and 58 long- and short-term objectives. 

The initiative has been incorporated into NATO’s defense-planning process. 

The five areas are:

• mobility and deployability (moving forces quickly to crisis areas, using 

air- and sealift capabilities);

• sustainability (maintaining and supplying forces and logistics support 

for operations far from home bases); 

• effective engagement (successfully engaging an adversary in all types of 

operations, from high to low intensity);

• survivability (protecting forces and infrastructure against current and 

future threats);

• interoperable communications (improving the compatibility of allied 

command, control, and information systems).

Progress to date varies among countries. According to NATO officials, 

nations have generally focused on goals that are easier to accomplish and 

less expensive, such as revising NATO’s structures for improved 

interoperability and establishing logistics processes that support multiple 

nations. They stated that the more difficult objectives, such as those that 

require acquisition of expensive platforms or involve expensive research 

and development, are years from completion. High-cost items, such as 

electronic jamming for the suppression of enemy air defenses, fall into this 

category. 

According to the DOD March 2001 Report on Allied Contributions to the 

Common Defense, while the NATO alliance has made modest progress in 

some DCI areas, in other respects progress toward DCI objectives has been 

disappointingly slow. The report notes that while the major European 

allies are set to acquire advanced fighters, long-range cruise missiles, 

medium-lift transport aircraft, and attack and transport helicopters, most 

of these systems will not be built or available in sufficient numbers until the 

latter part of the decade. In addition, the report notes the continued 

shortage in strategic and oversized cargo airlift capability. While some of 

the allies plan to acquire a new cargo aircraft—the A400M military 
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transport—their level of financial commitment to the multibillion-dollar 

project is not clear, according to DOD. The report further states that the 

alliance’s need for improved, secure, and deployable command, control, 

and communications capabilities remains unmet.

ESDP, a broader political and security strategy, was formally launched in 

1999 as a tool to strengthen the European Union’s ability to respond to 

crises and improve Europe’s military contribution to regional security.5

 

The EU’s objective is to develop the capacity to make decisions and 

conduct EU-led military operations when NATO as a whole is not engaged 

as an alliance. Potential missions include humanitarian support and rescue 

missions, peacekeeping, and crisis management operations involving 

combat forces. To accomplish this goal, ESDP requires many of the same 

systems and equipment identified in DCI. However, the European Union 

will not have a separate or standing EU force. ESDP will allow European 

nations to provide an integrated response—with political, economic, and 

military means—to regional crises, according to EU officials. NATO will 

still be responsible for collective defense.

In 1999, EU member states established the Headline Goal—to be achieved 

by 2003—of deploying up to 60,000 persons for crisis management within 

60 days and sustaining them in the field for at least 1 year. Their intention 

is that these forces should be self-sustaining, with the necessary command, 

control, and intelligence capabilities, logistics, and other combat support 

services. Air and naval elements would also be available, as necessary. To 

date, EU nations have pledged 100,000 soldiers, 400 aircraft, and 100 ships 

to meet the Headline Goal. To implement the ESDP missions and Headline 

Goal, EU member states have also established other defense capability 

goals, similar to those of DCI, in areas such as command and control, 

intelligence, and strategic transport. Most of these goals are medium- and 

long-term efforts that will likely be accomplished toward the end of the 

decade or later and will parallel certain DCI goals and objectives. Officials 

from the EU, NATO, and European member states confirmed that by 2003 

the EU would be capable of responding to lower-level peacekeeping and 

5

Although ESDP was formally launched in 1999, the idea was generated many years earlier. 

A first attempt to create a European defense community occurred in the early 1950s, 

concurrent with the development of the European Coal and Steel Community. The EU’s 

1997 Treaty of Amsterdam formally identified ESDP, and the concept gained strength after 

the Franco-British Summit in St. Malo, France, when the United Kingdom overcame its 

reservations about an autonomous European defense capability in general and ESDP in 

particular.
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humanitarian operations. Shortfalls in major defense systems and 

equipment would prevent them from leading sustained, higher-intensity 

military operations.

The EU has also established goals for providing civilian personnel, such as 

police forces and judicial specialists, to a regional conflict. According to 

the EU, these personnel are important components of post-Cold War crisismanagement operations. By 2003, the EU goal is to provide 5,000 police 

officers for international missions, 1,000 of whom could be deployed in 

fewer than 30 days. In addition, the EU has compiled a database of judicial 

and penal staff specialists that EU member states could make available 

when needed to enhance the effectiveness of police missions. According to 

DOD officials, the United States would find it difficult to provide this 

capability because these civilian personnel would not be readily available.

Although DCI and ESDP share many of the same objectives, the U.S. and 

European officials with whom we met pointed out that ESDP is providing 

enhanced motivation to European countries to strengthen their defense 

capabilities. The Dutch parliament, for example, earmarked funds 

specifically for ESDP. Several European officials pointed out that DCI’s 58 

objectives are too many for most nations to consider, and that the ESDP 

Headline Goal is a more realistic approach to European security. 

According to a senior U.S. NATO official, if ESDP is the motivation for 

European allies to improve their defense capabilities, then the United 

States firmly supports these efforts. He stated, however, that ESDP is not a 

“burdensharing panacea,” and that differences between defense needs and 

financial resources will affect the EU’s ability to implement its plans.

The September 2001 NATO operation to collect weapons from Albanian 

extremist forces in the Former Yugoslav Republic of Macedonia illustrates 

both European accomplishments and the challenges that lie ahead as 

European nations attempt to take greater responsibility for regional 

security and stability. Operation Essential Harvest relied primarily on 

European leadership, personnel, and military assets. The United Kingdom 

served as the lead nation, and as such it had to provide specialists not 

provided by other European nations, including bomb disposal experts, 

reconnaissance troops, engineers, logisticians, and medics. The United 

States provided logistical, surveillance, and medical support that was in 

short supply in theater. U.S. defense officials stated that this operation, 

while relatively small in size, demonstrates the European allies’ willingness 

to assume responsibility for events in their region. However, officials also 

noted that certain EU nations still have capability shortfalls, and that the 
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EU still has a way to go before it can carry out a sizeable operation on its 

own. A follow-on mission that began in late September 2001 under German 

leadership is tasked to protect international monitors who will oversee the 

implementation of the peace plan in the Former Yugoslav Republic of 

Macedonia.

European Allies Taking 

Steps to Address DCI and 

ESDP Shortfalls

U.S. and European defense officials highlighted the short- and long-term 

steps that European nations are taking to address DCI and ESDP shortfalls. 

In the short term, allies have sought solutions to provide airlift capability 

until the A400M military transport aircraft is deployed, toward the end of 

the decade. The United Kingdom currently is leasing four U.S. C-17 aircraft, 

and Germany is leasing six aircraft, when needed, from Ukraine. Italy has 

recently purchased C-130J aircraft from the United States, which will 

satisfy part of Italy’s strategic lift requirement until the A400M aircraft is 

available. Italy is also leasing F-16 fighter aircraft from the United States, 

as it awaits delivery of the Eurofighter aircraft. European allies have made 

progress in upgrading combat aircraft and acquiring combat identification 

systems and deployable command-and-control capabilities. Operational 

cooperation has also improved allies’ military capabilities. 

In the long term, European allies are planning to procure major systems 

and equipment that require substantial amounts of financial resources. 

Increasingly, allies are participating in cooperative equipment-acquisition 

projects to share the financial burden of acquiring expensive systems and 

equipment. These cooperative projects enable nations to share the costs of 

developing major defense systems and also encourage interoperability 

between militaries. European allies are jointly acquiring and collaborating, 

primarily on large items such as strategic lift, fighter aircraft, and transport 

helicopters, as shown in table 2. Although this cooperation has produced 

advantages by pooling resources, the complexity of nations working 

together has also created problems for European allies because of differing 

national priorities and budgetary conditions. NATO officials identified 

cooperation at the bilateral level, where allies working together can help 

eliminate shortfalls. For example, the Netherlands recently offered to 

spend $38 million to upgrade four large German aircraft with air-to-air 

refueling sets. In return, Germany will provide the Netherlands with air 

transport, a capability they would not be able to finance alone. 
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Table 2: Major Multinational Equipment Projects Involving European Countries

a

 Official delivery date. Financial difficulties may delay the delivery date further.

b The anticipated delivery dates are 2003 for Germany, 2005 for France, 2004 for Italy, and 2007 for the 

Netherlands.

Sources: National documents and country meetings. 

European Defense 

Budgets Limit Shortand Mid-Term 

European Defense 

Objectives

At a time when European allies have agreed to take on increased 

responsibility for security in the European region, the level of their defense 

budgets limits their ability to make the necessary changes to their defense 

structures.6

 The relatively flat and in some cases declining defense 

equipment budgets are of particular concern because they constrain 

material improvements in defense capabilities. Structural problems, such 

as high personnel costs, combined with relatively low overall defense 

budgets affect the ability of the European allies to increase defense 

equipment spending significantly. Although the allies have identified 

Project Participating nations

Anticipated

delivery datea

Eurofighter – EF2000

(new fighter aircraft)

Germany, Italy, Spain, and the 

United Kingdom

2002

Airbus A400M

(military transport aircraft)

Belgium, France, Germany, Italy, 

Luxembourg, Portugal, Spain, 

Turkey, and the United Kingdom

2008

Medium-range Extended Air 

Defense System (MEADS)

Germany, Italy, and the United 

States

2012

Tiger

(support helicopter)

France and Germany 2003

NH90

(tactical transport helicopter)

France, Germany, Italy, and the 

Netherlands

varies by countryb

Horizon Frigate France and Italy 2005-2008

Meteor

(long range air-to-air missile)

France, Germany, Italy, Spain, 

Sweden, and the United Kingdom

2012

Joint Strike Fighter

(fighter aircraft)

Italy, the United Kingdom, and the 

United States

2010

6

Our analysis in this section is based on the NATO definition of “defense expenditure.” 

NATO uses a standard definition of defense expenditure to facilitate the comparison of 

defense budgets of NATO member countries. The NATO definition differs in some cases 

from definitions in national budgets. For example, some countries do not include payments 

toward retirement pensions in their defense budgets. The NATO definition includes 

contributions to military pensions but not payments to current retirees.
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interim measures to cope with capability shortfalls, the success of the DCI 

and ESDP initiatives continues to depend upon the provision of sufficient 

resources. Since European nations are unlikely to increase their defense 

budgets substantially in the near- and mid-term, according to U.S., NATO, 

and other officials, they are cooperating with joint equipment purchases to 

increase their defense capabilities and share costs. It is too early to 

discern what effect, if any, the terrorist attacks of September 11, 2001, will 

have on future European defense spending. U.S. and European officials 

have indicated, however, that some European allies are discussing 

changing their defense budgets and priorities as a result of these events.

Defense Budget Projections 

Continue a Generally Flat 

Trend 

Defense budget projections for 2001-2004 indicate that, of the countries we 

visited, France, Germany, and the United Kingdom are maintaining 

relatively flat defense budgets. Political decisions to balance competing 

needs will likely present challenges in the years ahead for defense budgets 

in the countries we visited, according to U.S. and European officials. As 

indicated in figure 18, Germany’s defense budget is expected to decline 

from 2000 through 2004 at an annual average rate of -1.6 percent, in real 

terms. The United Kingdom plans to increase its defense spending at an 

annual average real growth rate of .7 percent from 2000 through 2003. We 

were not able to obtain formal defense budget projections from Turkey or 

beyond 2002 for France. However, French officials stated that, based on 

projected expenditures for defense equipment and personnel, France’s 

total defense expenditures would likely increase at an annual average real 

growth rate of slightly more than 1 percent over the next 5 years. Italy’s 

annual average real growth rate for defense spending is projected to be 

about 4 percent from 2000 through 2004.7

7

 Defense budget projections provided by NATO member countries may be more definitive 

for some countries than for others, depending on their budgeting process. DOD and 

Department of State officials do not believe Italy’s defense budget projections will change 

much as a result of the September 11, 2001, terrorist attacks, given the level of the 

projections.
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Figure 18: Projected Defense Spending in Selected European Countries, 1995-2004

Note1: These levels (but not the trend lines) are dependent on the exchange rates used to convert 

national currencies into dollars. 1995 exchange rates were used for these calculations. Because of 

substantial exchange-rate depreciation in some countries, using a later base year would yield 

significantly lower spending levels. For a description of our methodology for these calculations, see 

chapter 1.

Note 2: 2000 figures are NATO estimates. NATO will release actual figures in December 2001.

Note 3: Turkey did not provide defense budget projections and France did not provide projections 

beyond 2002.

Source: GAO analysis of data from NATO and National Ministries of Defense.

Defense spending as a percentage of GDP in NATO European countries has 

generally been lower over time than in the United States. These 

differences, which were particularly significant in the 1980s, will continue 

through 2004. In Turkey, defense spending as a percentage of GDP has been 

higher than in the United States since the mid-1990s. The average defense 

share of GDP in 2000 was 2.4 percent for all NATO members, 2 percent for 

European NATO members, and 2.9 percent for the United States. The 
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average defense share of GDP is expected to continue to decline slightly 

from 2001 to 2004 for France, Germany, and the United Kingdom, as shown 

in figure 19, given relatively constant defense spending levels and GDP that 

is projected to grow at an annual average rate of 2.5 percent. If this 

economic trend continues, defense spending as a percentage of GDP for 

most NATO countries will continue to decline.

Figure 19: Projected Defense Spending as a Percentage of GDP for Selected 

European Countries and the United States, 1995-2004

Note: Turkey did not provide defense budget projections and France did not provide projections beyond 

2002.

Source: GAO analysis of data from NATO, National Ministries of Defense, and DRI-WEFA, a subsidiary 

of Global Insights, Inc. (Waltham, MA).
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Variety of Factors Drive 

European Defense Spending

Differences in defense spending levels between the United States and its 

European allies are attributable to a number of factors, such as competing 

domestic budgetary pressures, varying threat perceptions, and other 

national priorities. In addition, many EU nations face European Economic 

and Monetary Union fiscal constraints and other national requirements that 

have affected their ability to contribute to defense, as highlighted in figure 

20. Recent budgetary debates in European countries have highlighted the 

trade-offs facing decisionmakers as they try to satisfy demands for social 

spending within a budgetary environment characterized by lower economic 

growth and fiscal constraint. U.S. officials stated that the U.S. global role 

and worldwide interests are important factors driving U.S. defense 

spending.

Figure 20: Factors Driving European Defense Spending

Sources: EU, NATO, and member countries.

Most U.S. and European officials with whom we met stated that different 

threat perceptions are the driving force behind defense spending 

differences in the United States and Europe. Increasingly, European 

nations see their security affected by factors such as organized crime, 

illegal immigration, and economic instability, none of which can be 

resolved through defense spending. European officials we interviewed 
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stated that European publics generally do not see the need for increased 

defense spending, given the demise of the Soviet threat and given rising 

domestic priorities. Nevertheless, Turkey’s defense spending is influenced 

by the potential external threats surrounding it—Iraq, Syria, Russia, and 

Greece, according to Turkish officials. 

Domestic budgetary priorities are a key factor affecting European defense 

spending. Defense budgets face strong and increasing pressure from 

domestic spending in European countries. Historically, the countries we 

reviewed have spent a large portion of their GDP and government budgets 

on social programs such as pensions, health, and welfare. For example, 

according to the Organization for Security and Cooperation in Europe, in 

1997—the latest year for which comparable data are available—France, 

Germany, Italy, and the United Kingdom spent an average of 26 percent of 

GDP on social programs, compared with 16 percent in the United States. 

Many officials we met with in France, Italy, Germany, and the United 

Kingdom identified domestic budget priorities as the main reason why 

defense spending would not likely increase substantially in the near- and 

mid-term. Further, officials noted that, given upcoming elections in some 

European countries, domestic programs likely would be at the top of 

government priorities.

We reported in 1999 that the costs associated with the financial 

requirements for membership in the European Monetary Union could also 

affect the flexibility of governments to allocate resources to various needs, 

including defense.8

 We noted that the European Monetary Union’s 

requirement for countries to limit deficits and debt will constrain 

government spending options in the near- and mid-term.9

 For example, U.S. 

embassy officials in Rome said that EMU fiscal requirements are an 

important factor that would likely influence future defense spending levels 

in Italy. 

8

NATO: Implications of European Integration for Allies’ Defense Spending (GAO-NSIAD99-185, June 1999).

9

The Maastricht Treaty on European Union, signed in 1992, set forth several economic 

conditions for countries to join the euro area. These included, in part, reducing general 

government deficits to 3 percent of GDP and showing progress toward lowering government 

debt to 60 percent of GDP.
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Other factors unique to each country can also affect available resources for 

defense. For example, Germany continues to provide substantial financial 

support to the former East Germany. After the Cold War ended, Germany 

spent billions of dollars in reconstruction and investment in this new 

region.10 German officials emphasized that Germany’s funding and support 

to the former East Germany contributes to security in the region. They said 

that the economic development of the former the East Germany is a 

priority that Germany will continue to support. According to the German 

government, the federal budget for the year 2000 allocated approximately 

$19 billion in funding for rebuilding the eastern part of Germany. 

Infrastructure investment projects alone, including transportation, housing 

and urban development, and environmental clean-up, totaled about $10 

billion for 2000. 

Funding for Defense 

Equipment Is Key to 

Improving Defense 

Capabilities, but Challenges 

Remain

The amount of funding that the European allies devote to defense 

equipment is critical to improving European defense capabilities and 

addressing capability shortfalls, such as those identified in the Balkans, 

according to U.S. and European officials.11 However, as a percentage of the 

defense budget, funding for equipment has generally been relatively low for 

most NATO European nations. Between 1985 and 1989, Canada, Germany, 

Italy, Norway, the United Kingdom, and the United States spent an average 

of 20 percent or more of their defense budgets on equipment. In 2000, the 

Czech Republic, Norway, Turkey, the United Kingdom, and the United 

States devoted at least 20 percent of defense spending to equipment. 

Germany, Italy, and many others spent less than 15 percent during the same 

year.12

European allies have pledged to increase equipment spending over the 

decade; however, some nations are facing difficulties in doing so. 

10According to German officials, costs vary widely and are complex because they include, in 

the area of defense, destruction of weapons, environmental clean-up and decontamination 

of training sites, demolition and reconstruction of new bases, deployments from eastern to 

western Germany, and personnel costs resulting from early retirement payments.

11Equipment expenditures refer to the costs for major equipment and associated research 

and development.

12NATO does not maintain official budget figures for France because it is not part of NATO’s 

integrated military command and therefore does not participate in the defense planning 

process. However, France’s defense budget data indicates that it spent more than 20 

percent of its defense budget on equipment in 2000.
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Germany’s annual average real growth rate for defense equipment is 

projected to be -1.3 percent for the years 2000 through 2004, while Italy’s 

growth rate for equipment is expected to increase by about 4 percent over 

the same period. According to budget projections from the United 

Kingdom, its annual average real growth rate for equipment is expected to 

increase by 1.4 percent from 2000 through 2003. France’s defense plans 

include a .8 percent increase for equipment from 2003 through 2008. Turkey 

could not provide equipment budget projections at this time.

European allies’ defense budget challenges arise in part from the structural 

challenges inherent in many of their defense budgets. Chief among these is 

large personnel costs. Combined with generally low defense budgets, a 

relatively small percentage of the budget is left for equipment. This has 

affected the ability of some European nations, such as Germany and Italy, 

to carry out restructuring and modernization efforts, according to U.S. and 

European officials. In contrast, the United Kingdom, which has lower 

personnel costs, has greater flexibility and as a result has been able to 

spend a higher percentage of its defense budget on equipment.

Personnel expenses for many NATO countries constitute a large portion of 

their defense budgets—60 to 80 percent, for 7 of the 19 NATO nations in 

2000. This has affected the ability of these countries to allocate additional 

funding for defense modernization.13 In Germany and Italy, personnel 

expenses as a share of overall expenses rose to 59 and 74 percent, 

respectively, in 2000. These figures are expected to remain about the same 

through 2004, in part because of the initial expenses of moving toward an 

all-volunteer force. Officials stated that in the longer term, personnel 

expenses should decrease. In the United Kingdom, which has an allvolunteer force, personnel expenses have decreased relative to other 

expenses since the end of the Cold War and represent 39 percent of its 

defense budget in 2000. This has allowed the United Kingdom greater 

flexibility to spend more than other European countries do on equipment. 

Plans indicate that U.K. personnel costs will likely remain at this level 

through 2003. As a matter of comparison, personnel costs constitute 38 

percent of the U.S. defense budget and will increase slightly through 2004. 

Figure 21 highlights projected trends in personnel and equipment spending 

for Italy, Germany, the United Kingdom, and the United States.

13In 2000, Belgium, Greece, Italy, Luxembourg, Poland, Portugal, and Spain spent more than 

60 percent of their defense budgets on personnel costs, according to NATO.
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Figure 21: Projected Trends in Defense Spending for Germany, Italy, the United 

Kingdom, and the United States, 2000-2004
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Note1: France and Turkey could not provide this data.

Note 2: 2000 figures are NATO estimates. NATO will release actual figures in December 2001.

Sources: GAO analysis of data from NATO and National Ministries of Defense.
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Given that equipment spending constitutes a relatively small portion of the 

defense budgets of most NATO European allies, one or more costly defense 

equipment projects can reduce the flexibility that countries have to buy 

other types of needed equipment. This is the case, for example, with the 

EF2000 Eurofighter aircraft, Europe’s largest defense project, which 

involves four nations—Italy, Germany, Spain, and the United Kingdom. 

Aircraft deliveries are expected to continue for about 15 years. We 

reported in 1999 that Eurofighter acquisition alone accounted for a growing 

portion of equipment budgets in Germany, Italy, and the United Kingdom. 

In Germany, the Eurofighter represented 24 percent of the equipment 

budget in 1998 and 28 percent in 1999. It remained at about this level in 

2001, according to U.S. embassy officials in Germany. Further, Germany’s 

funding problems contributed to delays in the start of the program. In 

Italy, to fund such a large program, the government relied in part on 

financing sources outside the defense budget, such as from the Ministry for 

Production Activities. 

The challenges associated with the acquisition of the Eurofighter aircraft 

provide valuable lessons for planned European equipment programs, 

particularly the Airbus A400M military transport aircraft, a nearly $18 

billion project that is considered to be the EU nations’ “flagship” project. 

In 2008, nine European nations plan to begin deploying the first of an 

expected 212 aircraft. The aircraft are considered critical in resolving 

shortfalls in European strategic lift capabilities and will help European 

allies meet DCI and ESDP objectives. Although no contract had been 

signed as of October 2001, U.S. and European defense officials had raised 

several budgetary concerns. Chief among these was whether Germany can 

afford to fund its share of the program—the largest share of any 

participating country. As of October 2001, Germany had not yet decided 

whether to contribute to the developmental phase of the project. Germany 

will pay a larger unit cost once the aircraft are delivered if it does not 

contribute to the developmental phase. German embassy officials stated 

that if the German equipment budget remains relatively level, the combined 

cost of the Eurofighter aircraft and the A400M military transport aircraft 

could account for 40 to 50 percent of the German equipment budget in 

2008. Although other nations do not face the same level of problems, they 

are pursuing other funding solutions. Italy, for example, will likely pursue 

some funding for the A400M costs outside of its defense budget, as it is 

doing with the Eurofighter. U.S. officials questioned the ability of 

European nations to fund two major aircraft programs concurrently, and 

stated that the A400M program is likely to be extended or postponed until 
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sufficient resources become available. The number of aircraft planned for 

production may also be reduced, they said.
Page 92 GAO-02-174 European Security

Appendix I

Aircraft and Capabilities Provided by Selected Apendxies

Countries in Operation Allied Force ApendxiI

Note: The number of specific aircraft deployed is classified information.

Source: NATO’s Supreme Headquarters Allied Powers, Europe. 

Type of 

Mission France Germany Italy United Kingdom United States

Combat air patrol M-200G Tornado ADV; F-104 Sea Harrier F-15; F-18; F/A-18

Suppression of 

enemy air defenses

Tornado Tornado EA-6B; 

F-16;

EC-130H

Close air support M-2000C; 

M-2000D; Super 

Etendard; Jaguar-A

AMX;

AV-8B;

Tornado

GR-7 A-10; AV-8B;

B-1B; B-52; F-14; 

F-15; F-16; F/A-18

Reconnaissance Etendard4P; 

Jaguar-A; 

Horizon (HELO); 

CL-289 (UAV); 

Crecerelle (UAV)

Tornado; 

CL-289 (UAV)

AMX;

Tornado

F-14; F-18; 

F/A-18D; P-3C;

SH-60B; U-2; 

Hunter (UAV); 

Pioneer (UAV); 

Predator (UAV)

Airborne early 

warning

E-3F E-3D; MK-6 E-2C; E-3B/C

Airborne battlefield 

command and 

control center

EC-130E; E-2C

Air-to-air refueling C-135F B-707 VC-10 KC-135; KC-10; 

KC-130; S-3

Battlefield air 

interdiction

M-2000D; Mirage; 

F-1GT; Jaguar-A; 

Super Etendard

Tornado AMX;

Tornado

GR-1; 

GR-7

AV-8B; F-14; F-15; 

F-16; F/A-18; 

F-117; B-2

Joint surveillance 

and target attack 

radar

E-8C
Page 93 GAO-02-174 European Security

Appendix II

Progress of NATO Allies’ Efforts in Moving 

Toward an All-Volunteer Force ApendxiI

Sources: Official country documents, the United Nations, and The Military Balance.

Country Status

Percentage of Conscripts in

Total Forces (2000)

Percentage of Conscripts

in Army (2000)

Belgium No conscription N/A N/A

Canada No conscription. N/A N/A

Czech Republic Czech government announced a move toward 

ending conscription.

43% 62%

Denmark Armed forces rely on conscription. 23 34

France Conscription ended in July 2001, more than 18 

months ahead of schedule. 

20 28

Germany Move toward a more volunteer armed force began 

in 2000. A combination of conscript and 

professional armed force will remain, with 

mandatory service reduced from 10 months to 9 

months after 2002. 

40 46

Greece Armed forces rely on conscription. 62 74

Hungary Armed forces rely on conscription. Length of 

service will be reduced from 9 months to 6 

months.

52 76

Iceland No conscription. N/A N/A

Italy Conscription is projected to end by 2006. 

Conscription already ended for citizens born after 

1985.

45 54

Luxembourg No conscription. N/A N/A

Netherlands No conscription. N/A N/A

Norway Armed forces rely on conscription. 57 59

Poland Armed forces rely on conscription. 52 62

Portugal Conscription is projected to end in 2003. 13 21

Spain Conscription is projected to end by 2002. 31 30

Turkey No plans by Ministry of Defense to eliminate 

conscription.

87 93

United Kingdom No conscription. N/A N/A

United States No conscription. N/A N/A
Page 94 GAO-02-174 European Security

Appendix III

Key Equipment Programs for France, 

Germany, Italy, Turkey, and the United 

Kingdom ApendxiI

Note: Equipment priorities are not listed in order of priority.

Source: National documents.

Country Equipment Priorities Key Acquisition Projects

France Power projection

Command, communications

Intelligence

Rafale fighter aircraft

Tiger support helicopter

NH90 transport helicopter

Horizon frigate

LeClerc main battle tank

Helios II satellite

Germany Strategic transport

Command, control, communications

Intelligence

Reconnaissance

Precision-guided munitions

SAR-Lupe satellite

Medium-range air-to-air missile

Strategic reconnaissance

Tiger support helicopter

Frigate F124/F125

Eurofighter

Medium-range extended air defense system

Italy Strategic transport

Command, control, communications 

Intelligence

Logistic support

Upgrading missiles

C130-J

Meteor long-range air-to-air missile

Storm Shadow medium/long range missile

Eurofighter

Joint Strike Fighter

NH-90 tactical transport helicopter

New aircraft-carrier

Turkey Attack helicopter

Airborne early warning and control aircraft

Battle tanks

AH-IZ King Cobra attack helicopter

M60 tank

Leopard main battle tank

United Kingdom Strategic lift

Command, control, communications

Intelligence

Force projection

Precision-guided munitions

Roll-on roll-off vessel

C-17 strategic lift aircraft

Bowman battlefield communications system

Meteor long-range air-to-air missile

Joint Strike Fighter

Eurofighter

Astor airborne stand-off radar
Page 95 GAO-02-174 European Security

Appendix IV

Comments From the Department of State ApendxiIV
Page 96 GAO-02-174 European Security

Appendix V

GAO Contacts and Staff Acknowledgments ApendxiV

GAO Contacts F. James Shafer (202) 512-6002

M. Elizabeth Guran (202) 512-4580

Acknowledgments In addition, Jodi Prosser, Andrew Crawford, Paul Rades, Andrea Riba, 

Bruce Kutnick, Gezahegne Bekele, Berel Spivack, Lynn Cothern, 

Martin De Alteriis, Beth Hoffman León, and Hynek Kalkus made significant 

contributions to this report.

(711543) Letr
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